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European Market Update 26 Sept 2018

Posted by Tim Sholl on 26-Sep-2018 22:48:44

Markets are waiting for confirmation that the US Fed is raising interest rates again at the meeting in Washington today. Expectations have been solid that they will move to raise rates by 0.25% , but most will be waiting for the discussion about forward projections and the impact that will have on world markets. If the Fed begins to talk about interest rates being close to a neutral level then we may see a reversal in long USD positions and a drop in bond yields . 

In Europe the markets are watching the Brexit negotiations with some scepticism that a deal can be reached as first the UK reject something and then the EU choose to reject something else. The economic numbers in the UK have been solid with some inflation while the GBP has rallied in the past month.  Italy is struggling to reach a budget deal within the coalition government with both sides calling for increased spending while the Finance minister is trying to fit in with the EU guidelines.

The major trade disputes between the US and China , Canada , and Europe continue to grow in the background without yet causing any permanent damage to the economies. The auto sector is struggling today with both Brexit fears and the possible threat that Trump will follow through on his plans for large tariffs on all imported European cars.

Stock indices are mixed today with both Germany (down 23) and Italy (down 18) lower , while France (up 17) and the UK (up 24) head higher.

The US dollar has recovered today on the expectations of the rate rise after a six week fall with the EUR at 1.1732 down 30 , the GBP at 1.3160 down 21 , and the JPY at 112.99 weaker by 2. The DXY index is at 93.97 up 24 and looking strong.

Bond yields have been rising as the global economy improves and some inflation driven by the rise in oil prices enters the economy . Current prices show the US10 at 3.10% , the UK10 at 1.60% , the DE10 at 0.55% and the IT10 at 2.89% all at recent range highs.

Daily Chart - EUR/USD - has broken above trendline last week and now we may get a retest of the break down at 1.1680.

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Topics: Trading, Market News, European Market Update