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EU Bullet Report | Risk Aversion Continues Ahead Of Fed/BoJ
Posted On 26 Apr 2016
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We’re continuing to see a little risk aversion in the markets on Tuesday, with investors adopting come caution ahead of this week’s key risk events, the Federal Reserve and Bank of Japan meetings.
- Oil and GOLD: US crude futures showed limited movement on Monday, continuing the lack of activity which marked the Friday session. US crude was trading at $43.74 per barrel in the North American session. Brent crude futures are trading at $45.42. A weaker dollar helped gold extend gains into Tuesday, with investors adjusting positions ahead of policy meetings this week at the Bank of Japan and the U.S. Federal Reserve. Gold is highly sensitive to rising rates, which lift the opportunity cost of holding non-yielding assets such as bullion, while boosting the USD.
- Stocks: U.S. stock prices fell on Monday due to weaker oil prices. The DJI fell 0.15 percent the S&P 500 declined 0.18 percent and the Nikkei fell 0.8 percent lower.
- Currencies: The USD lost ground after an unexpected drop in US new home sales added to investor uncertainty over the economy’s outlook ahead of the Fed Meeting tomorrow. The GBP also showed gains on Tuesday following what has been a very successful week for the ‘remain’ campaign. Between Chancellor George Osborne’s 200-page dossier on the risks of leaving the EU, US President Barack Obama’s warning that a trade deal wouldn’t come easy, the odds of a ‘Brexit’ have fallen considerably which the pound is benefiting greatly from.
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