Global stock markets are starting the week on a high note, with major US indices reaching new record highs. This optimism is fueled by renewed hopes for a US-China trade deal and widespread expectations of a Federal Reserve interest rate cut this week. In the forex market, the US dollar is weakening against major currencies, with the British Pound and Euro showing strength.
### Stock Market Outlook
US stock markets rallied on Monday, with the S&P 500 closing above 6,800 for the first time. The Dow Jones Industrial Average and the Nasdaq Composite also reached new record highs. This bullish sentiment is driven by several key factors:
* **US-China Trade Deal:** Positive signals from both the US and China regarding a potential trade deal have boosted investor confidence. A meeting between President Trump and Chinese President Xi Jinping is scheduled for Thursday, and a framework for a deal is expected to be discussed.
* **Federal Reserve Rate Cut:** The market is pricing in a near-certain interest rate cut by the Federal Reserve on Wednesday. This expectation is supported by recent inflation data, which came in slightly below forecasts.
* **Corporate Earnings:** A busy week for corporate earnings, with several major technology companies, including Microsoft, Alphabet, Meta, Apple, and Amazon, set to report their quarterly results. Strong earnings could provide a further boost to the market.
### Forex Market Outlook
The US dollar has been on the back foot, with the Dollar Index falling to a one-week low. The weakness in the dollar is a result of the same factors driving the stock market rally: trade deal optimism and Fed rate cut expectations. This has led to gains for other major currencies:
* **GBP/USD:** The British Pound has strengthened against the dollar, trading around 1.3365. The pair has been supported by the broad-based dollar weakness and has snapped a six-day losing streak.
* **EUR/USD:** The Euro has also been a beneficiary of the dollar’s decline, reaching a fresh weekly high near 1.1670. The single currency is extending its winning streak for a fifth consecutive day.
### What to Expect Today
Investors will be closely watching for any new developments on the US-China trade front and any forward guidance from the Federal Reserve following its interest rate decision on Wednesday. The market is in a risk-on mood, and this is likely to continue in the short term, with stocks and riskier currencies favored over safe-haven assets like the US dollar and gold.
