News & Analysis
U.S. trade deal with Mexico drives stocks – knocks dollar; Positive influences continue for risk – EURJPY closing in on 130
Upcoming high impact news:
18:30 EUR German Ifo Business Climate (Med Impact)
U.S stocks saw further strong gains in last night’s session driven higher on positive trade news. The S&P500 and the Nasdaq hitting new record highs. The S&P500 gained 22.05 closing at 2896.74 new records. Materials and financials as the best-performing sectors. The Nasdaq gained 71.92 closing above 8000 for the first time, led higher by strong performances from Facebook, Amazon, Netflix and Alphabet. Closing at 8,017.90 record level. The Dow Jones jumped by 259.29 points led higher by gains Caterpillar, Boeing and auto stocks.
President Donald Trump said the deal would be called The United States-Mexico Trade agreement, leaving behind the 24-year-old NAFTA name. “The name NAFTA has a bad connotation because the United States was hurt very badly by NAFTA,” he said. Trump added that the deal with Mexico is also very helpful for farmers and manufacturers. U.S. Trade Representative Robert Lighthizer said the deal must be approved by Congress before being implemented. -CNBC
European stocks ended the day higher on renewed optimism. Traders were also digesting latest comments from the Fed earlier in the session. The main indices all finishing in the green, the DAX added 143.79 – the FTSE gained 14.27 and the EUR Stoxx 50 added 30.34. Markets reopened in Turkey following a week-long holiday. The Turkish lira weakened 3% Monday amid continued concerns over the country’s economy. Traders watched this development but it failed to influence the session.
Oil continued higher, members of an OPEC and non-OPEC committee find that participants in an output deal have been steadily increasing production as planned. Hedge funds and other money managers cut their bets that oil prices will keep rising in the week to August 21 the U.S. Commodity Futures Trading Commission (CFTC) said on Friday. USOUSD closed 32 cents higher at 68.76.
Gold extended gains adding 3.80 after spending a fair chunk of the day in the red. A weaker USD continues to support buyers. The USD fell further on Monday, Powell’s comments and the new trade U.S Mexican trade deal the main negative influences. “The takeaway from Jackson Hole is that the Fed may not look to tighten much more than is currently priced into markets,” said Mark McCormick, North American head of Foreign Exchange strategy at TD Securities in Toronto. “It is clear the Fed cycle is close to nearing the end-game,” he added.
Risk majors gained for a second straight session, the EURUSD performing the best adding 64 pips. Risk also reversed weaker session to the Yen, closing in the green, the EURJPY making it 5 in a row price closing back in on 130 a level not seen since the 2nd of August. The USD lost ground to the JPY and gave back a 54 pip rally to the CAD to end 47.5 pips lower, breaking 1.2987 support. The EUR advanced to most overnight, the EURGBP hit new weekly highs at .9065 and despite a stronger AUD the EURAUD gained 34 pips.
Good Trading from Eightcap
Sources; CNBC – All times are AEST
* The information provided here has been prepared by EightCap’s team of analysts. All expressions of opinion are subject to change without notice. Any opinions made may be personal to the author and do not reflect the opinions of EightCap.
In addition to the disclaimer on our website, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. EightCap accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently, any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication.
Please note that past performance is not a guarantee of or prediction of future performance. This communication must not be reproduced or further distributed without prior permission.