Trading foreign exchange on margin carries a high level of risk, and may not be suitable for all investors. Before deciding to trade foreign exchange you should carefully consider your investment objectives, level of experience, and risk appetite. You could sustain a loss of some or all of your initial investment and should not invest money that you cannot afford to lose. CFDs are complex instruments. You can lose your money rapidly due to leverage. Please ensure you understand how this product works and whether you can afford to take the high risk of losing money.

Central banks, trade tensions to drive markets

A semblance of calm and positivity shines over the start of the week where a series of central bank updates and potential trade news are expected to continue driving markets.

Positive start to the week for Asia

Going against the trend in the past couple of weeks, a positive commencement to the week for Asia markets appeared to be the case. This comes on the back of a moderate recovery in recession fears for Wall Street going into the end of last week and the clear absence of the ratcheting up of trade tensions and geopolitical unrests over the weekend. On the converse, President Donald Trump who convened with Apple, CEO, Tim Cook had made a strong case for investors to carry hopes for improvement after the President noted that a ‘good case’ on tariffs had been made in Apple’s situation. This is significant for markets seeing this favourite amongst the US FANG stocks having been hit in the past weeks on the back of the latest tariffs proposition.

Separately, geopolitical tensions sustain, but it appears to have taken a relatively peaceful course in Hong Kong’s case. The first largely peaceful rally in 11 weeks were reported to have taken place according to the Straits Times. While further clashes should not be ruled out, this will temporary lay to rest some concerns of Chinese intervention that could exponentially escalate the situation.

Volatility remains the mainstay

All the above said, there may perhaps be little doubt that volatility would sustain going forth. As told in our Asia week ahead note, US-China trade tension concerns and central banks watch will be key this week. The fact remains that the US administration is hesitant in engaging in a trade deal with China at present. Doubts casted on Huawei’s license extension alongside a decision to be made on Monday with regards to the matter according to President Trump also comes on the heels of China’s vow for retaliation, items that could further rock the market this week.

Meanwhile on monetary policy, central bank minutes from both the Federal Reserve and the European Central Bank (ECB) are expected. Investors will likely be looking more to the Jackson Hole symposium for an updated view by the Fed, with the event also being a major one prior to the September 1-18 Federal Open Market Committee (FOMC) meeting where a rate cut is expected. As it is, the positive Asia open and the clear abating of fear, as told by USD/JPY’s trade to $106.30 levels, are suggesting that hopes for support permeates. The fear here is that the Fed may not deliver despite growing concerns that the Fed had fallen behind the curve in easing monetary conditions. One to watch. The ECB’s July minutes meanwhile would be parsed for evidence of rate cut suggestions and other stimulus plans.

Friday: S&P 500 +1.20%; DJIA +1.44%; DAX +1.31%; FTSE +0.71%

This information has been prepared by IG, a trading name of IG US LLC. This material does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. You should not treat any opinion expressed in this material as a specific inducement to make any investment or follow any strategy, but only as an expression of opinion. This material does not consider your investment objectives, financial situation or needs and is not intended as recommendations appropriate for you. No representation or warranty is given as to the accuracy or completeness of the above information. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. Any research provided should be considered as promotional and was prepared in accordance with CFTC 1.71 and designed to promote the independence of investment research. See our Summary Conflicts Policy, available on our website.

See an opportunity to trade?

Trade forex on our award-winning platform.

Live prices on the most popular forex markets


Prices above are subject to our website terms and agreements. Prices are indicative only

You might be interested in…

Find out what charges your trades could incur with our transparent fee structure.

Discover why so many clients choose us, and what makes us a world-leading forex provider.

Stay on top of upcoming market-moving events with our customisable economic calendar.