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EQUITIES GAIN AS INVESTORS ADD TO MONETARY EASING BETS

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Equities gained yesterday, perhaps on heightened expectations over monetary easing by the ECB and the Fed, as well as a dovish turn by the BoE. The nomination of Christine Lagarde as the ECB chief, the miss in US data, as well as the disappointing UK PMIs may have been the fuel behind the increasing stimulus bets. We also had a Riksbank policy meeting, with the world’s oldest central bank keeping its interest rate and forward guidance unchanged.

BETS OVER FURTHER STIMULUS BY CENTRAL BANKS INCREASE

The dollar traded lower against the majority of the other G10 currencies on Wednesday and during the Asian morning Thursday. It underperformed against NOK, AUD, NZD, SEK and CAD in that order, while it gained somewhat against CHF, JPY and GBP. The greenback was found virtually unchanged against EUR.

USD performance G10 currencies

The weakening of the safe havens and the strengthening of the commodity-linked currencies suggest that markets switched to a risk-on trading activity. Indeed, major EU and US indices were a sea of green yesterday, with all three major US indices finishing at record closing highs, though Asian bourses today were mixed. Japan’s Nikkei 225 closed 0.30% up, while China’s Shanghai Composite slid 0.33%...

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Source: https://www.jfdbank.com/en/research/equities-gain-as-investors-add-to-monetary-easing-bets-20190704
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