European markets aren’t under the influence of feeble German GDP data, for now. The strongest economy of the Eurozone is sick. It’s GDP shrunk to – 0.1 percent while the previous reading was 0.4 percent. The euro dollar pair bounced back on the back of this data because the number of was in line with expectations.
Speculators aren’t convinced if the current upward move will last for long because It is highly likely that France, Italy and Spain may follow the same route very soon. Moreover, the European Central Bank is going to look at the overall picture of the Eurozone and that only tells one story- the sick man needs its medicine. Hence, the German Chancellor, Angela Merkel, will have to unleash a new fiscal stimulus package for his country to combat the effects of US-China trade war. This may just do some of the trick for the eurozone’s economy.
Don’t Buy The Old Film
As for the US markets, if you are thinking that the dead cat bounce is going to last for some time, then perhaps you may be wrong. Traders should not be betting on the long side when it comes to their equity market trades and this is because we have seen these lifeless promises several times before. President Trump decided to delay the new tariffs on China by another 3 months and traders reacted yesterday way over the top.
Yes, I concur that it is a step in the right direction but I am not convinced if it is going to yield anything again. Yesterday’s bounce in the equity markets was purely due to the reason that the equity markets were way too oversold and a corrective move was long due. But this doesn’t mean that the current downtrend is going to change, no, it is likely to continue.
Chinese Economic Data- Centre of Attention
Moreover, I do not think that traders have paid much attention to the important economic numbers out of China. The Chinese industrial number was much softer, it printed the reading of 4.8% missing the forecast of 6% and the retail sales data also echoed the same message. It came in at 7.6% while the forecast was 8.6%. So do you still think that there is a valid reason to celebrate? As long as we do not see some serious progress on the trade war, any rebound in the equity could be an opportunity to slam it down.
Gold Price Still Likely To Move Higher
So, overall, we could see a little bit of risk on day on this means at the gold price may struggle to touch its highest level of the year which sits at $1,535. But I am convinced the part of least resistance for the for the gold price is skewed to the upside. it is only a matter of time before bulls push the price back above the 1500 mark and start targeting the level of $1,550 again.