Optimism emerges in US-China trade talks and traders throw bids in Asian markets with Tokyo’s main index adding 1.31 percent to 21,144 making to eight weeks high, the Hang Seng in Hong Kong rose 1.16 percent to 28,497 and Shanghai Composite index advanced 1.84 percent to 2,721. The Aussie ASX 200 index shed 0.3 percent to 6,063. US Dollar index trading flat at 96.73. The crude oil rose 50 cents to $53.60/barrel, and Brent oil gained 53 cents to $62.95/barrel. Gold is adding two dollars to $1312.65.
European stocks follow Asia higher with DAX rising 0.51 percent 11,181, CAC40 also trading 0.38 percent higher at 5,076 and in London the FTSE100 pushed 0.46 percent higher at 7,165.
On the Lookout: Riksbank will make its interest rate decision today and is widely expected to stay on hold with unchanged future guidance. Bank of Japan (BoJ) Governor Haruhiko Kuroda reiterated that inflation is slowly moving towards 2% price target.
In Australia, Consumer confidence rose by 4.3 percent in February, its biggest lift in 33 months to 103.8 (a read above 100.0 indicates optimists outnumber pessimists). Despite the lift in sentiment, confidence hit a 16-month low in January.
The International Energy Agency (IEA), in its monthly oil market report, maintained 2019 global oil demand growth forecast of 1.4 million bpd vs. 1.3 million bpd in 2018 saying that the political crisis in Venezuela risks disrupting the global crude market.
In the US trading session, the US January inflation report will headline, with the focus on the core figures amid weaker energy prices. The headline CPI figure is likely to ease to 1.5% y/y vs. 1.9% previous while the core rates are seen lower at 2.1% vs. 2.2% last.
Trading Perspective: In forex markets, Kiwi was the big mover after the Reserve Bank of New Zealand (RBNZ) monetary policy statement, and Governor Orr’s comments sent the NZDUSD more than 100 pips higher to highest levels in six days at 0.6838. The Aussie dollar also rallied to weekly tops near 0.7125. GBPUSD is trading lower today and broke below the 1.29 level. The pair will test the support at 1.2875 at the 50-hour moving average.
EURUSD made an impressive comeback yesterday jumping 0.43 percent, above 1.13 after in US session hit YTD low at 1.1257. Immediate resistance can be found at the 50-day moving average at 1.1391 while more supply will emerge at the 1.1420 region.
Scotiabank currency analysts think that the short-term technical for EURUSD is on the bearish side and traders should trade the currency pair with caution for the time being. They believe that “Momentum indicators are bearish and the DMI’s are confirming. The Euro appears to have broken the ascending channel from November, and near-term support appears limited ahead of the November low around 1.1220. We are somewhat cautious, however, given that EUR continues to trade within the range and given that it has shown a remarkable ability to rally from the mid/upper-1.12s in several instances over the past few months.”
USDJPY is trading close to yearly highs advancing 0.18 percent to 110.68 with bullish bias still intact and with traders eyeing the 111 barrier. Traders continue to dump Japanese Yen on risk on mood after positive news from the trade talks frontier. The round figure at 111 is the immediate resistance, while a break above can lead price to 200-day moving average at 111.30. On the downside, support can be met at the low from yesterday at 110.34 while more solid support can be found at the weekly low around 109.43 area.