The Dollar Gains as US & Chinese Equities Outperform European Indices

The US stocks on Friday made a great slide from their record highs while the dollar itself gained much during Friday’s trading.

The dollar has gained versus most of the other majors with the US treasuries releasing data that shows the biggest ever drop in manufacturing and sales optimism in 2016. Dollar strength can also be partly attributed to the weakening of the European currencies due to an equities slowdown over a deadly terror attack in Nice, France. There are still some jitters over other follow-up attacks around the rest of Europe spelling out pessimism over the Euro-indices.

The S&P 500 has like anticipated, made a follow up on its impressive three week rally. The index had made an 8.2% jump in the three week rally but boosted mainly by the emerging shares markets in the USA. The same trend was echoed in China as the shares from the emerging-markets class also climbed for a seventh day to reach the highest levels since last year November. The performance of the indices have shown that the US and China economy are not doing as bad as experts had earlier suggested, with the Chinese economy now seen to show signs of stabilization.

USA and China equities give a major boost to the global average

The value of global equities is thought to have grown by an estimated $4.6 trillion since June 27, with most of it owing to the US and Chinese economies performing better than their earlier projections. The consumer and manufacturing sectors in both countries offer some relief because things are not as encouraging in the European economies. The USA and Chinese economies both showed gains in the consumer and manufacturing sector while the Eurozone CPIs gave a bleak picture of things to come. The June manufacturing data showed a remarkable drop and the data was also followed up by poorer forecasts for July and August results.

At the moment, the EURUSD trades at 1.1067, down from Thursday’s NY session at 1.1133. Traders are also expecting the USD gains to continue deep into next week’s trading if US stocks continue to perform and major US players continue releasing their earnings reports. JP Morgan Chase & CO. and the agricultural giant Alcoa Inc. both released data that gave much hope as the earnings season begins.