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The Brexit negotiations were back on track yesterday. A result from the negotiations could be solid movements by the Pound. Traders however, need to be aware of what to look for. The scale is still between free mobility and free trade. This relates to the UK allowing for foreigners into the country and if the EU keeps UK investments. Mark Carney head of the Bank of England will
report today on the UK economy.
The NASDAQ ended yesterday on a rebound closing at 6,239 points. The biggest concern is if this trend will continue or will it drop back to the 6,000 points. Traders should be prepared for downward pressure coming from the technology sector.
All eyes will be on remarks from the FED whether or not there will be a third hike by end of year. More pressure from the Fed could push markets lower, especially the NASDAQ index.
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A majority win for the French President Emmanuel Macron could provide the Euro currency with more support. A win will allow for pro EU policies to be activated. Traders should keep his eye on the Euro.
There is huge pressure for the Tech sector in the US. This is because higher interest rates is shifting the Technology to safer assets. The NASDAQ index closed on Friday at 6151 points. A break below 6000 points this week, will generate high volatility though out the global markets.
Oils has been trading for $45 a barrel. The commodity price has decreased due to the three factors – cut productions by OPEC, the Qatar conflict and high US inventories. A break below $43 a barrel this week could generate new downside targets.
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The Federal Reserve rate decision will be published today at 18:00 GMT. The press conference by Janet Yellen will start at 18:30 GMT. The rate is projected to rise from 1% to 1.25%. The probability for a rise is 99% based on the CME Group. Thus, in order to trade the event traders need to look at expectations because the rate hike is already priced. The million dollar question is if the Fed will raise its rate again this year? This information will be released at 18:00 GMT together with the actual rate decision. Another third hike in 2017 is not priced in the market yet.
If expectations show another third hike in 2017 than the dollar could receive strong support and force Gold lower. Stock trading could also become very alluring as bank stocks could appreciate while technology companies suffer from downside pressure. If expectations stay low for the year and don’t show another hike in 2017 than a dollar selloff could occur which could push Gold higher.
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One again Nasdaq Index dropped closing at 6,175 points. The Nasdaq Index symbolizes the biggest portion of the technology sector in the US. Most of the biggest technology companies are traded in the Index. These companies include all FANG stocks and Apple. Facebook, Amazon, Netflix, Google and Apple have lost more than $150 billion in the last few days.
The US technology sector is immense and reflects the biggest companies in the world. If tech companies start hurting from more downside pressure, there could be a chain reaction that could spread fast to global markets. One of the biggest contributions for this possible move is the Federal Reserve decisions to raise interest rates. The next decision will take place tomorrow 18:00 GMT. Higher rates generate safer alternatives for investors and higher financial payments for tech companies.
Market volatility represented by the VIX, jumped yesterday by 7% and closed at 11.46. A move above 12 today could push market fear back and the Nasdaq Index lower.
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Investors had a tradeoff last Friday that was very interesting. The tradeoff expresses the selling of technology stocks and buying of finance stocks. The NASDAQ index decreased by 1.8% while the Dow Jones increased by 0.42% to a new record high of 21,271 points.
The FANG companies (Facebook, Amazon, Netflix, and Google) together with Microsoft and Apple, crushed on Friday. Some by more than 3%. On the other hand, bank stocks such as JPMorgan and Bank of America pushed higher by 3%. It seems that the market is trying to establish a new position in a world of higher interest rates. Banks appreciate higher rates but technology companies find it problematic. Banks give out loans and technology companies desperately need money to finance operations. This correlation was strengthened on Friday.
The next rate decision by the Federal Reserve will take place this Wednesday at 18:00 GMT followed by a press conference. The technology vs finance correlation move, could continue to provide trading opportunities during the event on Wednesday.
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Wednesday’s scheduled interest-rate hike is on everyone’s mind after the huge tech selloff last Friday.
http://www.marketwatch.com/story/all-eyes-on-tech-sector-ahead-of-expected-fed-interest-rate-hike-2017-06-10
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The UK elections will be held today. The polls will open for voters and will close at 21:00 GMT. Meaning the first results and the GBP's first reaction should be at around 22:00 GMT. The GBP/USD is currently trading around 1.2962 and could break 1.3 during the day although no strong move is projected before the results. Sideway trading could be attractive until the results are out. Investors have an options to place and trade tight support and resistance levels.
Any distrust, after the results are out, should generate downside pressure on the GBP. No uncertainty spells a strong win for Theresa May. If she can build a solid alliance, investors could support the GBP. On the other hand, a weak coalition or a Jeremy Corbyn win, will add to market uncertainty, at least in the short term. In that case downside pressure could gain momentum.
Traders should manage short term swings in the market in order to sustain profit targets. This translates to preparing for liquidity risk in the trading accounts. Massive moves by the GBP could occur in the next 24 hr's.
Assets to trade will be the GBP vs all majors and the UK FTSE.
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Elections in the UK will take place tomorrow. All investors/traders are urged to prepare their trading accounts. There are possibilities for large swings from the GBP currency versus most of the majors, due to the election. Time will play a crucial role tomorrow, and traders should to have a solid money management plan in order to sustain short term swings. The short-term swings depend on the results themselves. The closer the results are the more volatility expected from the GBP.
The weekly Oil inventory report will be published today at 14:30 GMT. US Oil inventories have been dropping since the start of April. The expected number today is another drop of 3.1 million barrels. The million dollar question is, will the decrease in inventory boost expectations for lower future supply? Traders are recommended to expand their portfolio using Oil currencies such as the CAD, RUB and NOK. Short term trading is the most attractive tactic is today's report.
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