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Fundamental Analysis & Market Sentiment

Fundamental Analysis & Market Sentiment

Fundamental analysts are leaning in favor of the view that the recent quarter-point cut in the U.S. interest rate will be the last cut for a while, with Jerome Powell recently signaling there are likely to be no further cuts and maintaining an upbeat take on the U.S. economy.

The U.S. economy is still growing, but there are some fears of a pending recession. A major issue concerning sentiment on the U.S. and global economies is the trade dispute between the U.S. and China, with the U.S. using the treating of new tariffs later this month as leverage in negotiations. There is increasing hope that a deal will be signed soon which should be positive for the U.S. stock market. However, the deal has yet to materialize and Friday saw the release of poorer than expected U.S. retail sales data and the Dollar fell again over the past week. The benchmark U.S. stock index, the S&P 500, ended the week at an all-time weekly closing high price.

There are a few long-term trends in the Forex market, notably a bullish trend in the British Pound which is most strongly manifested in GBP/USD and GBP/JPY. The long-term bullish breakout made by the GBP/USD was pushed to a climax by the landslide British election victory for the governing Conservative Party, signaling a much firmer government and the exit of the U.K. from the E.U. at the end of January 2020. Attention will now turn towards the likely terms of Brexit upon which the British Government will proceed.

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