Even after a weekend break, the feel-good factor from Friday's US close has – coupled with recent developments over Iranian nuclear issues – ensured the markets have held onto an optimistic slant. Although markets in the US have not set off at the same pace with which they closed last week, they are still relentlessly pushing the limits at the top of the curve.
Europe inspired by US markets
The DAX appears to be using the Dow as a trading template as it continues to push higher, dragging the rest of the major European markets with it. The FTSE 100 has been the most reluctant to join the move higher, although today it appears to be keeping pace with the pack.
The Iranian nuclear accord has helped see oil prices drop, with the most obvious beneficiaries being the airlines. International Consolidated Air (IAG) appears to be best placed to cut costs, judging by its share price movement.
The banks continue to be under the spotlight, with the Royal Bank of Scotland having its dealings with distressed small businesses reviewed by Clifford Chance, at the behest of Bank Of England deputy Andrew Large.
Pre-Thanksgiving enthusiasm on Wall Street
Last week the Dow paused only for the briefest of moments as it broke through the 16,000 level, and Friday's close goes to show that US investors have far loftier targets as their ultimate aim. Although there are nerves surrounding the levels both the Dow and S&P 500 are hitting, there is also a reluctance to jump off the gravy train until it has come to a complete halt.
We could well be in for a disjointed week of US trading with the Thanksgiving holiday hitting on Thursday, and the natural dearth of activity the following Friday. We could see particularly thin trading volumes posted for the week.
No call for safe havens
Gold’s collapse continues at pace, and it looks almost inevitable that a retest of the late-June lows will be on the cards. The precious metal's safe-haven status could easily be questioned; however, with the recent developments surrounding Iran, fear levels will naturally be receding anyway.
The Iran nuclear accord has gone a long way to easing fears over Middle East tension, and has subsequently helped lower oil prices. With the easing of sanctions against Iran and the improved chances of the taps being turned back on, markets have looked to reassess where fair value is, as the supply side of the equation could soon change.
Dearth of economic data
Once again it looks like GBP/USD is struggling with vertigo north of the 1.6200 level; that being said, a lack of economic data from either country today does go some way to explaining the lethargy in the currency cross.
Speculation surrounding the Australian national bank's plans to tweak the interest rate continues to force AUD/USD lower, with the September-October rally being progressively wiped from the memory.