Markets Active but Decline Continues
The financial markets have been active since the start of the month but a decline that has started a while back continues.
GBP Going Low as Brexit Issues Affects Economy
The Brexit discussion has caused mayhem for the performance of the British Pound. Since the start of the month, the issue has been a hot topic as Theresa May continues to battle those that are against the move.
The contradiction of information that came out from the UK has affected the performance of GBP and the currency fell to a new 2018 low. The Sterling remained in a bearish zone this week after experiencing something similar last week. It declined steeply from the 1.2760 swings high against the USD. The GBP/USD pair last week broke the 1.2620 and 1.2550 support levels and has subsequently settled below the 50 hourly simple moving average.
Dollar scales to a 19-month peak as gloom grows in other parts of the world
The USD capitalized on the gloom that is growing in other parts of the world to record gains against some of the leading currencies. Recently, the Chinese Yuan has taken a beaten following China’s retail sales in November growing at its slowest pace since 2003 while industrial output also slows down. This led the Yuan to drop by 0.36 percent to 6.9025 per dollar.
The Euro has also performed poorly this month as the two largest members in the Eurozone showed signs of a slowdown. Italy resisting major changes to deficit has also affected the Euro’s performance.
The euro last week plunged by 0.43 percent at $1.13045 after German data showed private-sector expansion slowed to a four-year low in December. French business activity unexpectedly contracted and the two events have affected the Euro negatively.
After two weeks in December, the pound continues to slip against the USD and dropped by 0.59 percent to end the week at $1.2585. It is slightly above the 20-month low of $1.2477 it reached on Wednesday and it is expected to drop even lower if situations in the UK does not change soon.
Due to the recent turmoil and uncertainty in the global financial markets, our ForexSignal trading desk has taken a very cautious outlook. For example, the Dow and NASDAQ stock markets have plummeted overall for 2018 after previously being up in the double digits, and worldwide the markets are without clear direction due to slowing economies, Brexit uncertainty, and inconclusive trade tariffs between China and the USA.
Dow Jones drops nearly 400 points this week as rising fears for global growth continues. It was not the only one as S&P 500 dropped 1.4 percent dipped following the slowdown in the consumer staples and health care sectors. NASDAQ Composite this week pulled back 1.4 percent and the losses recorded wiped out the gains recorded earlier this week.
The markets continue to underperform following the double digits growth experienced at the start of the year.