Global market is seeing mixed activity as USD losses its safe haven appetite over increasing bets on possible interest rate cut by US Fed. All eyes are now on headlines over Trump’s visit to UK and Fed Chair Jerome Powell’s speech later tonight.
Summary: Asian equities opened positive for the day as bears took a breather post volatile Wall Street session last night. However, lingering bearish cues and trade war woes capped gains post which disappointed macro data led rally resulted in Asian equities seeing sharp declines and closing in red. On one side, projections for prolonged trade war underpin demand for bonds and other safe haven assets. RBA – Australian central bank cut interest rate in line with investor expectations by 25 basis points bring down the rate from 1.50% to 1.25%. Similar, investors are expecting US Federal Reserve to cut rates in upcoming decision meet post Monday’s comments. European shares opened in red as tech share sell off extended to the market from Wall Street post US antitrust action towards tech firms. However, European market has since recovered to most major benchmark indices trading in green in mid-European market hours. Forex market is also seeing positive activity as rate cut expectations surrounding US Fed put pressure on USD giving market bulls a breath of positive influence.
Precious Metals: Precious metals are trading with slight bearish bias in European market hours as profit booking activity post yesterday’s positive price run and improved risk appetite in European market capped demand for safe haven assets. However, cheap USD on account of dovish fed expectations has helped limit decline in gold and silver today.
Crude Oil: As trade war woes escalate and geo-political tensions take center stage, crude oil price is beginning to decline. Brent crude is likely to test $60 support level shortly if the current scenario continues given the fact that crude oil bulls are suffering over economic slowdown worries on geo-political and economic cues which outweigh supply disruption from OPEC supply reduction and Middle East tensions. In mid-European hours WTI is trading around $52.73 per barrel.
AUD/USD: The central bank of Australia RBA cut interest rate as expected meeting investor expectations. However the pair still trades positive today as trade war tensions have taken backseat for now. Given USD’s weakness over expectations for rate cut by US Federal Reserve and healthy risk appetite in European market the pair is likely to continue positive price action well into early US market hours.
On The Lookout: Trade War proceedings between China and USA take the backseat today. US President Donald Trump’s visit to UK, US Federal Reserve stance on interest rate decision are the main topics in focus in the global market today. Now that RBA is done with rate cut and ECB likely to keep interest rate unchanged in upcoming meeting, all focus is on US Federal Reserve. Comments from Fed members yesterday suggested that Fed is on path for rate cut shortly. All eyes are now on Fed Chair Jerome Powell’s speech later tonight. Meanwhile, in late European market hours all eyes are on talks between US President Donald Trump and UK Prime Minister Theresa May. Trump met with major UK business leaders today morning and is now on talk with PM May in 10 Downing Street, UK with updates in BBC so far hinting at Trump’s promise to May for a good trade deal with US once UK completely comes out of EU. Meanwhile, investors caution on geo-political issues continues to limit gains in the global market.
Trading Perspective: Updates from Trump’s visit to UK and talks with PM May, Powell’s comments later today will greatly shape Wall Street activity today. Further, Forex market is highly likely to retain positive price action as long as fed rate cut prospects weigh down USD in the broad market.
US Market: Wall Street index futures and US equities trading in the international market ahead of Wall Street opening are trading positive given healthy risk appetite in European market. Traders now await headlines from UK and Powell’s speech for directional cues which are likely to affect price action in Wall Street later tonight. Wall Street will open positive on cues from Europe but gains are likely to be capped on caution over trade war proceedings.
EUR/USD: The pair was trading positive in the global market earlier today on USD’s weakness over Fed rate cut bets. But weak EU inflation data capped EU’s gains resulting in the pair trading range bound with slight bearish bias. Weak USD capped EURO’s decline as traders await US Fed Chair Powell’s speech later tonight for short term directional trading bias.
USD/CAD: The pair is trading flat in the global market with slight bullish bias in European market hours. While dovish fed cues on increasing rate cut bets cap dollar’s gains, declining crude oil price provided USD bulls with strength to maintain positive price action as commodity linked currency lost foot hold despite prevalent risk appetite. Traders now await US Fed Chair Powell’s speech later tonight for short term profit opportunities.
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