Uncertainties surrounding the Sino-U.S. trade deal on comments from White house representative and Brexit proceedings weigh down investor sentiment. US market to see earnings report from key tech and finance sector shares.
Summary: Global equities are seeing dovish price action as the trading session reached mid-week. Given the short term stalemate surrounding Sino-U.S. trade talks, Brexit related headlines and earnings report updates continue to provide directional cues for the global financial market. Asian market saw major indices and stocks trade within familiar price levels and close on a dovish note.
Following the Asian market, the European market opened soft and is trading in red as market mood seems risk-averse given recent Brexit developments. Further expectations of disappointing quarterly earnings updates from tech sector stocks also weighed down investor sentiment resulting in major indices, stocks and risk assets trading in red across European session. In the forex market, divided investor sentiment amid ongoing developments in geo-politics has resulted in major global currencies remaining range-bound within familiar price level despite flat USD in both Asian and European sessions.
Precious Metals: Rare metals continue to trade positive as Brexit uncertainties continue to influence demand for safe-haven assets despite headlines hinting at increased possibility of avoiding no-deal Brexit outcome. Cheaper USD also helped bring in increased fund flow on account of lower exchange rates as traders from EM markets were able to participate actively.
Crude Oil: Crude oil price is trading with dovish bias in the global market as an increase in US weekly API crude oil stockpile data affected bias in favor of crude bears. Expectations for build in US EIA data set to release later today also weighs down Crude oil bulls but the increased prospect of extension in OPEC supply and production cut agreement helped keep declines in check.
AUD/USD: The pair is trading with dovish bias as Australian Dollar saw follow-through selling activity from the previous session continue steadily today. Further, comments from white house advisers on unresolved issues surrounding Sino-U.S. trade talks also affected investor sentiment pushing the price below the 0.6850 handle. But flat USD helped AUD feel less downside pressure keeping decline in check.
On The Lookout: There is no major economic data release or geopolitical event scheduled today. On Brexit front, the UK parliament has rejected the Brexit timetable suggested by UK PM Boris Johnson and his ruling party. While this increased uncertainties surrounding Brexit, the delay in UK parliament’s vote on EU approved Brexit draft and deadline extension request made by PM last weekend helped decrease odds of no-deal exit on the upcoming deadline of October, 31. Traders now await EU’s reply to deadline extension request but most expect an extension to be granted until at least January 2020 as both sides want to avoid messy Brexit.
On release front in the economic calendar, the US calendar is set to see the release of EIA weekly crude oil stockpile data and house price index data while Canadian is set to see release of Wholesale sales data. In earnings calendar for the US, the market will see release of quarterly data from eBay, Tesla, Thermo Fischer Scientific, Pentair, PayPal Holdings Inc, Boeing, Caterpillar, Equifax, Ford Motor, Essex Property, Hilton Worldwide, Microsoft, NASDAQ Inc and Norfolk Southern.
Trading Perspective: Amid mixed market mood in the global market, the forex market is set to see range-bound price action in top currency pairs as USD is likely to remain flat while major currencies are weighed down by renewed Sino-U.S. trade deal uncertainties. Wall Street is set to see softer opening today given the disappointing price action of US futures in the international market on account of disappointing earnings reports from Caterpillar and Texas Instruments. However, positive earnings forecast for tech and finance sector shares set to release later today provide some level of hope for sharp recovery later in the day.
EUR/USD: The pair is trading in red for the third consecutive session today but mostly remains Rangebound in the lower half of 1.11 handle. Given flat USD and lack of major macro data updates from the US calendar later today the price action is set to continue unchanged ahead of ECB press conference later tomorrow.
GBP/USD: The pair is trading positive with GBP retaining most of the gains made in the last couple of days as increased odds of postponing Brexit deadline supports GBP bulls. Further, flat USD in the global market also provides some level of support helping the pair stay steady above the mid-1.28 handle. Traders now await EU’s response for UK deadline extension request for directional cues.
USD/CAD: The pair recovered some of the loss from the previous session but mostly remains range-bound near the 1.3100 handle as USD remains flat in the global market. However, a decline in crude oil price weighs down commodity-linked currency Canadian Loonie resulting in pair trading flat so far today. Traders now await Canadian Wholesale Sales data for short term profit opportunities.
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