EUR/USD Impact – Emerging Stocks Rise Fourth Day on Fed Outlook as Ruble Rebounds


Good day traders.

As we head into midweek, it is evident that the dovish stance of the US Federal Reserve probably sent ripples across the markets. It is speculated that the anticipation of a weaker US dollar is stimulating sentiments.

Let us be mindful that if this expectation does play out, the EUR/USD is likely to climb. Bloomberg has a good update on the equities rally.

Indian equities extended a three-week rally and bonds gained for an eighth day as investors bet the central bank will cut borrowing costs. Brazilian shares rose to the highest level since July as higher commodity prices helped extend gains driven by prospects for a change of government. China’s benchmark gauge rose to a two-month high as policy makers loosened controls on margin lending. The ruble gained 0.8 percent as Brent crude traded above $41 a barrel. Investors added $2.72 billion to U.S. ETFs that buy emerging-market stocks and bonds last week, according to data compiled by Bloomberg.

Developing-nation stocks entered a bull market last week and inflows into exchange-traded funds that buy emerging-market assets increased to the most since April 2014 as the odds of an aggressive U.S. rate policy receded. With European policy makers taking borrowing costs deeper into negative territory, investors are betting central banks will remain supportive of growth. The rally trimmed a 35 percent retreat from April through January that was driven by China’s economic slowdown and oil prices falling below $30 a barrel. Stock Valuations

“It’s a continuation of the dovish Fed trade,” said Michael Wang, a strategist at hedge fund Amiya Capital LLP in London. “The dollar could continue to trade weaker against emerging currencies until U.S. data turn much stronger. The Fed could have a higher tolerance for inflation before they turn more […]

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