DailyFX Q3 Forecasts for the FX Majors, Equities and Commodities
See how retail traders are positioning in the majors using SSI readings on DailyFX's sentiment page.
The second quarter didn't close with the quiet Summer trading conditions that we typically expect. Brexit and regular bouts of broad market volatility have generated remarkable swings in the FX and financial markets. The upcoming three-month period is likely to experience abnormally high volatility as well as more systemic concerns like global risk trends and Euro-area stability grow in stature. Read the individual fundamental and technical forecasts the DailyFX analysts have written for the majors, equity indexes, gold and oil below.
The beginning of the Q3'16 brings nothing good for the Euro. In our Q2'16 forecast, we warned not to discount a potential Brexit's vote impact on the Euro (likewise, it was one of the political factors underpinning one of our trade opportunities of 2016, shortGBP/JPY).
The Dollar Index stuck to its relatively benign 5.8 percent range just below 13-year highs for the fifth consecutive quarter. The fundamental motivation behind the Greenback’s remarkable climb over the preceding five years has clearly lost traction.
Coming into the second quarter of 2016, there was one major item on the calendar for the United Kingdom, and that was the Brexit referendum to be held a week before the end of Q2.
The ongoing depreciation in the USD/JPY exchange rate may continue to fuel speculation for a currency-intervention, but the Federal Open Market Committee (FOMC) and the Bank of Japan (BOJ) may have little choice but to endorse a wait-and-see approach over the coming months amid the growing uncertainties surrounding the world economy.
Gold continued to rise in the second quarter, with prices hovering near a two-year high ahead of the midyear mark. The markets’ skepticism about the prospects for further rate hikes from the Federal Reserve appears to account for the metals gains.
World stock markets ended the second quarter on a sobering note and are set to be begin the third quarter with reasons for investors to be concerned. Given the interconnectedness of the world’s economies, a number of factors could reflexively spark significant investor angst and continued selling the third quarter.
Shortly after the EU, referendum in the United Kingdom showed a ‘Vote Leave,’ outcome the price of crude oil declined by 7%. However, given the falling stockpiles and the drop in US crude production, many are wondering if a buying opportunity has arrived.
DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.