Global shares are enjoying a so called “relief rally” – a recovery after severe losses, led by the Shanghai Index which is trading higher by over 2%. Last night, Dow Jones and SP500 enjoyed the biggest percentage gain in 4 years. The positive stock environment is benefiting the USD, hence the drop of the EURUSD to 1.1320 levels, from 1.1715 3 days ago. USD was also lifted by surprisingly positive US durable Goods data which added sizeable gains to Monday’s more modest advance. GBPUSD dropped more consistently than the EUR however the losses were contained at the 1.5460 level, which is also the 100 day moving average.
USD is now the 2nd strongest currency of this week, next to the JPY. The main market moving event today will be the US Q2 GDP. Markets expect that the numbers will show a rise of 3.2%. A closely watched event will also be the Jobless claims and pending home sales data as well.
New York Fed's William Dudley suggested that a rate hike in September appeared less likely now. According to him, "the decision to begin the normalization process at the September FOMC meeting seems less compelling to me than it was a few weeks ago". Watch out for US data, beating expectations will make discussions about October Rate hikes become more and more likely.
Trading quote of the day: "Your ultimate success or failure will depend on your ability to ignore the worries of the world long enough to allow your investments to succeed." - Peter Lynch