Renewed trade deal hopes helped risk assets rebound. BOC rate statement, US PMI’s and OPEC summit in Vienna in focus.
Summary: Global equities today recovered from steep declined suffered at the start of the week over fresh trade deal-related headlines. While US President Trump’s tariff threats and decisions and comments on delaying trade deal until after US presidential election dampened investor sentiment earlier this week, fresh reports from Bloomberg stating that the US & China are working to determine the number of tariffs to be rolled back in a phase 1 deal improved optimism and the market mood.
Despite lingering uncertainties over lack of further information such as when Phase 1 deal will be signed, this news came as much needed update to help market contain its loss and gain some breathing space.
European markets took cues from this update and saw its major indices and equities move up by nearly 1% over the course of today’s trading session. Meanwhile, the forex market also saw major currencies gain ground while USD weakened on lingering trade deal uncertainties and improved investor risk sentiment.
Precious Metals: Rare metals market is seeing mixed activity in the global market today. While cheaper safe-haven assets traded flat, yellow metal saw positive activity as weakened USD gave global investors a good opportunity to stock up on safe-haven assets for lower exchange rate keeping price positive.
Crude Oil: Crude oil price gained positive momentum in the global market over fresh trade deal cues and expectations for extension in output cuts from OPEC during the upcoming meeting. The decline in US API weekly crude oil stockpile also came as positive support for Crude oil bulls.
AUD/USD: The pair is trading mostly flat but the price still remains steady above the mid-0.67 handle. The decline in Aussie GDP data and trade deal uncertainties weighed down AUD bulls. But fresh hopes following Bloomberg report on tariff rollback talks and weak USD helped keep decline in check.
On The Lookout: Following Bloomberg’s report on talks between China and the USA for tariff rollback decisions for phase 1 of the trade deal, investors await headlines from the US to shed light on proceedings of trade talks. Investors hope for signs that Phase 1 of the trade deal to be concluded in the foreseeable future even if not by the end of 2019 will provide the market with fundamental support for further recovery activity.
Upbeat German and UK macro data also provided some level of positive influence for the market to recover. All eyes now shift to UK election scheduled to occur next week with expectations for conservative party winning the election keeping the mood in favor of bulls and speedy Brexit resolution. Upcoming OPEC summit set to begin in Vienna tomorrow and Saudi Aramco’s IPO set to come live tomorrow are also in traders’ radar for profit opportunities.
In the economic calendar front, traders await the release of US ADP Non-Farm Employment change, Markit Composite and Services PMI and ISM Non-Manufacturing PMI data and EIA weekly crude oil inventory data while Canadian calendar will see the release of BOC interest rate statement and Q3 labor productivity data.
Trading Perspective: Forex market recovers on renewed trade deal hopes and cheaper USD. US and Canadian data awaited for short term profit opportunities. Wall Street futures trading in the international market ahead of US market hours saw a rebound on Bloomberg report which hinted at tariff rollback talks between China and the USA for closing Phase 1 of the trade deal. This along with positive cues from the European market suggests US Wall Street is set to see a positive opening for the day.
EUR/USD: The pair is trading positive today and managed to climb above 1.11 handle as EUR bulls received positive support from multiple fronts. Fresh trade deal hopes, upbeat German macro data came as great supporting factors. A dovish US PMI updates later in the day and positive trade headlines from the US will help the common currency gain stability above the 111 handle in the US market hours.
GBP/USD: The pair is trading positive and is testing 1.31 handle as UK macro data saw better than expected outcome. Pre-election polls in favor of conservative party lead also underpin GBP bulls which along with prevalent USD’s weakness keeps pair steady near weekly highs. Traders now await US data for short term profit opportunities and dovish US PMI’s will help GBP rise above 1.31 handle while positive PMIs will keep the pair trapped below 1.31 handle.
USD/CAD: The pair began its decline when US API stockpile data saw a dovish outcome. Further reports which rekindled hopes for trade deal and expectations for a decline in EIA weekly stockpile data and extended output cuts from OPEC in the upcoming meeting also underpinned CAD bulls. Traders now await US PMI’s & EIA stockpile data for short term profit opportunities and directional bias.
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