European markets remain focused on the OPEC’s oil supply verdict today
French Flash services PMI number are supporting the European markets
A trade war between the US and China is an interesting affair
Another mix set of economic data out of France today. The French Flash Manufacturing PMI fell short of expectations with the reading of 53.1 while the forecast was 54.
However, the strong French Flash services PMI number are supporting the European markets. The number came in much solid and it was also ahead of the expectations. The forecast was for 54.3 while the actual number came in at 56.4. This keeps the hope that Q2’s growth in Europe could be better than the Q1. The strong French flash services data is also supporting the euro-dollar pair, there is clearly more momentum for the bulls today.
European markets remain focused on the OPEC’s oil supply verdict today. For us, it is not about how much production surge we would see by the cartel, but how investors would see the cartel from here onwards. This is because Iran clearly has clearly walked away and it does not support the production increase. A divided OPEC is the last thing you want to see especially when you see the US shale oil becoming an important factor when it comes to the supply and demand equation.
A trade war between the US and China is an interesting affair for traders who love volatility. It is providing a lot of opportunities for day traders as one can continue to buy the dip and sell it at its top. Once again, yesterday was one of those days, equity markets faced selling pressure as traders took their profit off the table. The moment this issue takes the centre stage, the risk off trade takes over. But interestingly, the risk-off trade doesn’t necessarily mean that investors are buying gold. The precious metal itself is suffering from lack of demand.
In today’s market action, the focus remains on tit-for-tat reaction as European sanctions kicks in against a large number of US-based companies. Thanks to Trump administration which has chosen this weapon and hopeful that they will get things their way. Perhaps, they are undervaluing the negative effects of this strategy.
In terms of currencies, Sterling seems to have bottomed out for now after the Bank of England’s chief economist decided to join the hawk’s camp. Change of heart without any warning is a very common thing when we talk about the Bank of England’s policy members. After all, the governor himself is known as an unreliable boyfriend. Given that the chief economist has joined the hawk’s camp, trades are thinking that the possibility of another rate hike by the Bank of England is skewed to the upside.
