Asian stocks finished the day lower as the U.S. Justice Department yesterday brought charges against Huawei Technologies Co. alleging that it stole trade secrets from an American rival and committed bank fraud by violating sanctions against doing business with Iran. Caterpillar and Nvidia both reported forecasts for 2019 that disappointed analysts expectations. Nikkei 225 index in Tokyo shed 0.08% to 20,664, Hong Kong’s Hang Seng index was 0.14% lower at 27,546, and South Korean Kospi lost 0.2%. Shanghai Composite index lost 0.13% to 2.593, and Australian stocks started the holiday-shortened week under pressure, with the ASX200 down 0.75% as healthcare and banking sectors losses weigh heavily. European markets slide in the early session, DAX skid 0.63 percent to 11,210, CAC40 is 0.04 percent lower at 4,887, while London stocks started 0.50 percent higher at 6,781.
Gold hit a fresh seven-month high at $1304 as the precious metal benefited from the slight dip in the US Dollar, the yellow metal has been in an upward trend since November, and the less hawkish outlook from Federal Reserve has assisted the rally.
On the Lookout: A key event for markets today is the UK government votes on amendments to Theresa May’s “Plan B”. Investors are watching the earnings reports closely from both sides of the Atlantic as big corporations will report the outlook and future guidance. In Australia, there was a slump in NAB December business conditions from +11 to +2, while confidence remained unchanged at +3 for the economy. Conditions are down sharply from the first half of 2018 when the index averaged +18. In Eurozone, positive news is coming from Greece which will sell 2 Billion euro’s in 5 year bonds for the first time since the bailout. In Wall Street, consumer confidence from the Conference Board is due out later today. Markets will also be looking to the start of the trade talks in Washington tomorrow between the US and China. There’s also the Fed meeting to follow tomorrow so that will only add to the cautious approach by investors today.
Trading Perspective: Cautious trading in the forex market with USD index trading 0.04 percent lower at 95.72 while the pressure in Aussie dollar holds with AUDUSD giving up 0.01 percent to 0.7160, rebounding from the Asian session lows at 0.7137. Euro is posting gains against Swiss Franc (+0.16% – 1.1351) and Pound (+0.15% – 0.87061).
EURUSD positive momentum from November is still intact as pressure hit the US Dollar. As of the time of writing, the pair is adding 0.08 percent to 1.1438 helped by France Consumer Confidence which came above analyst’s expectations (88) in January. The euro strength can be eliminated by the 100-day moving average at 1.1450 and then the monthly high at 1.1486. Traders seem to ignore the Mario Draghi comments that the risks for Europe are turning to the downside. Support will be met at yesterday’s low at 1.1390 while more buying support will be found at the weekly high at 1.1289.
Investors in Euro futures added just 250 contracts to their open interest positions on Monday from Friday’s final 530,327 contracts. Volume, instead, dropped for the second session in a row, this time by around 94.7K contracts.
GBPUSD is trading 0.05 lower at 1.3151 moving in narrow 30 pip trading range as the Brexit talk comes into the spotlight again. A move back to 1.3090 can’t be ruled without canceling the bullish momentum – a break below will test the support at 1.3054. On the upside, 1.3212 is the first resistance while more supply will emerge at 1.3240 the weekly 50 SMA.
Open interest in Pound futures markets rose by nearly 5K contracts on Monday vs. Friday’s final 207,984 contracts, according to data from CME Group. On another direction, volume shrunk by around 41K contracts, reverting the previous build.