The GBP has gained in the past twenty four hours in a strong fashion. As Digital Markets Advisor predicted the Scottish referendum on independence was rejected by voters, meaning Scotland remains an integral part of the United Kingdom. Traders who were brave enough to buy Sterling at its lows and maintain a position have certainly profited. Also positive values can be seen in the FTSE.
Most major equity markets continue to take in the last days of summer with rigor and are posting gains. The Fed has certainly thrown some additional energy into Wall Street with a public stance on maintaining its ‘cheap money’ for the foreseeable future.
The EUR continues to hover near support levels and should be watched carefully. What are the lower depths for the Single Currency? Can it continue to lose value? Europe continues to suffer from a deep recession and its growth prospects are troubling. The ECB finds itself in hard waters to swim. Broad shifts in E.U. government policies will have to take place to spur on economic strength and two of its major players, France and Italy still remain bogged down in politics. Having said that and also knowing that the E.U. faces challenges, traders must consider values in correlation to the USD and the actions of the Federal Reserve. The U.S. does not want the Greenback to get too strong, while it may sound great on the podium for politicians in the States to proclaim ‘the dollar is strong’, it will not help exports and this would be frowned upon by many major industries and agricultural companies.
It will be a light day of data on Friday. Germany will post PPI data shortly, but this will have little effect on the markets. Japan already has released All Industries Activity and true to form the report was negative. Japan continues to be mired by stagnation and shows very little ability to escape its grasp. The JPY continues to lose value against the USD.
Gold has fallen further and as of this writing is near 1219.00 USD. The precious metal continues to exhibit weakness and traders should not be tempted into thinking now is the time to buy unless they can hold a position as a long-term proposition. Crude Oil also continues to test lows. WTI has shown little ability to gain the past month. Demand is in question globally as Europe and Asia show weakened economic conditions. The energy sector has felt the brunt of less speculation.
Equity markets in the States will get plenty of focus today. Records continue to be set via the Dow Jones. Geo-political concerns that have been rampant all summer via the Russia/ Ukrainian crisis and Middle East news has not gone away, but short-term sentiment has shown an ability by investors to digest the situations and move forward.