Further talk of stimulus policies being introduced by leading central banks continued to boost stocks overnight as Asian stocks increased for the 6th consecutive day, making it the longest winning streak of the year. Hong Kong’s Hang Seng Index rose 0.11%, Australia’s S&P/ASX200 increased 0.85%, and South Korea’s Kospi index advanced 0.30%, whilst Japan’s Nikkei 225 Index was up 0.46% at time of writing (4.54am GMT).
Stimulus talk and the introduction of monetary easing policies boost global stocks as injecting liquidity into the economy to keep long-term interest rates low encourage investment and increased the numbers being hired. Speculation is gaining momentum that the Fed Reserve, the European Central Bank, the Bank of Japan and the Bank of England are all considering stimulus measures with IMF head Christine Lagarde saying that the US, the world’s largest economy U will grow by 2% this year, reducing its previous 2.1% estimate. The US financial markets are closed for the 4th of July national holiday so all eyes will be on the key indicator of Labor Department nonfarm payrolls data to be published on the July 6th. Christine Lagarde said that that further monetary policy easing may be needed if the situation in the US deteriorates and weak employment figures in the US on Friday may prompt the Fed Reserve to introduce fresh stimulus.
Normally, the USD weakens under such talk but with speculation that other central banks are considering similar monetary easing policies the losses were in the USD were tempered. The US Dollar index which measures the greenback against a basket of 6 weighted currencies was up 0.11% whilst the Euro was down 0.15% against the USD. The USD was down 0.14% against the Aussie, which rose for the 4th consecutive day and reached a two month high as a government report showed retail sales rose in May, up 0.5% in May, which beat was better than the expected gain of 0.2% and above April’s gain of 0.1%
With it being a national holiday in the US, the binary trader’s focus should be firmly on Europe today as European stocks and indices indicate a higher opening and the release of PMI data throughout Europe should mean increased volatility for the Euro.
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