Temporary tariff relief for Huawei underpins risk appetite albeit lingering caution surrounding trade talks over lack of proof for concrete progress in talks. Macro data & speech from the central bank remain in focus.
Summary: The global market is seeing positive price action in most major risk assets across both equities and forex pairs. While the overall price momentum in the market may be positive, gains remain capped as traders retain caution over lack of solid proof on progress in the Sino-U.S. trade deal. Asian market saw major indices and equities trade range-bound albeit with prevalent positive bias despite cautious investor tone adding pressure to a broad market.
European market opened on a flat note amid cautious trading activity but major indices and equities saw positive price action with steady upward momentum as the deadline for US President Trump’s move to impose a tariff on auto imports in the US market from Europe, Korea, and Japan automakers expired. While fading concerns on US import tariffs did serve as a major positive force influencing upward price movement, the price rally also gained from yesterday’s move by White House to provide Chinese telecom giant Huawei with a temporary reprieve from tariffs. In the forex market, broad-based risk on trading activity kept US greenback under pressure helping currencies of other major global economies gain some positive headway.
Precious Metals: Rare metals are seeing mixed activity in the global market today. While silver gained on weaker US Greenback in the broad market, gold continued to decline given broad-based risk-on trading activity in global equity and forex markets which weighed down demand for safe-haven assets.
Crude Oil: Crude oil price continued to decline for the second consecutive session this week as caution surrounding the Sino-U.S. trade deal remained steady despite temporary tariff reprieve for Huawei. Caution ahead of the upcoming OPEC meeting also adds pressure to Crude oil bulls.
AUD/USD: The pair is trading positive in the global market over prevalent risk on investor sentiment. But gains remain capped as RBA meeting minutes displayed a dovish bias from RBA board on policy stance. Further cautions surrounding trade deal proceedings & Hong Kong protest woes also weighed down added dovish pressure to the Chinese proxy while USD’s weakness kept the price steady above the 0.6750 mark.
On The Lookout: Traders continue to wait for solid proof of progress in trade talks between China and the USA. While fresh headlines on constructive talks from both parties involved and USA’s move to provide temporary reprieve for Huawei products provided some optimism, there are no clear signs on actual concerns such as the timeframe for closing trade deal or timeline and venue details for when phase 1 of the trade deal will be signed. However, speculative bets from back to back positive headlines continue to keep the market immersed in a state of hazy stupor with a bullish bias.
On the UK election front, pre-election opinion polls continue to display a bias in favor of conservatives. There wasn’t much change in bias despite the public appearance of UK leaders yesterday leaving traders to look out for today’s televised debate between Boris Johnson & Jeremy Corbyn for comments that could help gain short term profit opportunities.
On release front today, the US calendar sees the release of Building Permits data, Housing starts data and speech by FOMC member Williams while Canadian calendar sees the release of Manufacturing Sales and speech by BOC Gov Council Member Wilkins. On the earnings calendar, the US market sees quarterly financial data from Home Depot, Transdigm, Medtronic and Kohls Corp.
Trading Perspective: Forex market is set to see major currencies trade with a positive bias against US Greenback on prevalent risk on investor sentiment and expectations surrounding positive outcome in Sino-U.S. trade deal talks. US stock and index futures trading in international market saw positive activity ahead of Wall Street opening on cues from White House move to provide temporary tariff relief for Huawei and broad-based optimism surrounding Sino-U.S. trade deal which suggests Wall Street is set to see positive opening and bullish price action in early trading hours while traders await further updates for directional cues.
EUR/USD: The pair is seeing positive price action in the global market today as EURO bulls are underpinned by USD’s weakness and broad-based optimism surrounding trade deal. Easing woes on US auto import tariff also added strength to EURO’s rally. Traders now await US data for short term profit opportunities.
GBP/USD: The British Pound is seeing price move in a zig-zag pattern around mid-1.29 handle as neither currency lacks the strength to lead the rally. Caution ahead of today’s televised debate between Johnson & Corbyn weighs down GBP bulls but US Greenback’s weakness helps the pair from declining below 1.29 handle or seeing sharp downward nosedive. Traders now await US data for short term profit opportunities.
USD/CAD: The pair is trading flat as both currencies are under considerable bearish pressure. Broad-based risk on investor sentiment and USD sell-off keeps US greenback under pressure while declining crude oil price and caution surrounding trade talks over lack of solid proof on progress weighs down Canadian Loonie. Traders now await US & Canadian data and speech from central bank members for short term profit opportunities.
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