With Japanese markets closed for a national holiday, subdued trading in Asia saw Asian stocks increase and the USD make small gains as speculation increases that the two largest economies in the world – the US and China will take steps to stimulate their respective economies sooner rather than later.
Hong Kong’s Hang Seng Index was up 0.08% and Australia’s S&P/ASX200 had increased by 0.70% whilst the dollar index, which tracks the performance of the greenback versus a basket of six other major currencies, was up 0.03% at 83.46 as bottom fishers snapped up nicely priced positions in the greenback which was weakened by disappointing U.S. consumer sentiment data and poor jobs reports in recent sessions.
The recent sessions also saw Beijing post its slowest quarterly growth figures for 3 years with gross domestic product increasing 7.6% in Q2, which, whilst largely in line with expectations, the figure was still far below the 8.1% rate posted in the first quarter of this year. Chinese Premier Wen Jibao said n that China’s economic growth hasn’t gained momentum and the government will step up policy modifications. This has heightened speculation that Beijing may cut its interest rate by as much as 1% to increase lending and stimulate growth.
German Chancellor Angela Merkel said over the weekend that she wouldn’t rush its German courts in their decision of whether or not participating in European bailout measures agreed in the last summit violates the country’s law. The EUR/USD was down 0.10%, trading at 1.2236 with the pair likely to find support at 1.2163, the low from July 13th, and resistance at 1.2334, the high from July 10th.
Today looks like being a busy day for binary traders. The subdued trading in Asian markets, mainly in part to the Japanese holiday, should be replaced with heavier trading when European markets open. European stocks indicate a lower opening but the day has some big economic data released with the eurozone to publish consumer price inflation data whilst later in the US, key retail sales figures are to be released.
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