Equities Positive Albeit Limited Gains On Caution Ahead of Trump's Speech

Karthik Subramanian

Karthik Subramanian has been a professional trader and fund manager over the last 18 years. He is basically a software developer who made the transition to financial domain around 18 years back as the attractiveness of the financial markets proved too much for him. He lives in Chennai in India along with his wife and son. He began his career as a software developer in 1999 and then gradually moved into the financial industry as he began trading stocks in his pastime. He then moved into the financial markets full time and then shifted his focus to the FX markets due to the liquid nature of these markets. Since then, he has been trading FX diligently and his favourite pair are the EURUSD and EURJPY. Over the last couple of years, he has found blockchain to be of high interest and considering his background in software and finance, he has since assembled a team of highly talented developers who have since worked on a variety of projects like crypto exchanges and blockchain architecturing. Now, he balances his time between trading and commenting on both the FX and crypto markets. He has worked with many publications including FX Street and Finance Magnates, which has helped him gain experience and also recognition across the industry. He loves to write and this passion has helped him to reach out across the FX and crypto industry. Right now, he works on his pet projects in the FX and crypto industry and spends his time writing and managing his blockchain team and helping it to reach higher.

Trump's Speech

Equities Positive Albeit Limited Gains On Caution Ahead of Trump’s Speech

November 12, 2019

Trump’s speech in NY Economic club to provide directional bias, caution ahead of speech caps gains albeit expectations for positive comments underpinning broad-based risk on investor sentiment. 

Summary: The global equity market is seeing major stocks and indices rebound from previous session loss. While caution still lingers in the global market as investors remain wary of developments surrounding geopolitical events, risk appetite seems relatively high in Asian and European markets today.

While risk assets traded positive and rebound from previous session loss, gains in most assets were capped on account of broad-based cautious investor sentiment as traders, analysts and investors alike await further updates on Sino-U.S. trade deal proceedings to get a clear understanding of exact status post recent bout of conflicting headlines.

In European markets, major shares and indices spiked on gains led by telecom and chipmaker shares, which saw fundamental support from upbeat quarterly financial data reports.

On the forex market, USD denominated major global currency pairs continue to trade in red as cautious investor sentiment in the global market influenced risk currency sell-off resulting in USD bulls gaining firm support. 

Precious Metals: Rare metals are seeing a decline in price as risk assets saw healthy demand in the global market today. Further, firm USD capped fund inflow from emerging markets on account of higher exchange rates for traders who hold currencies other than US Greenback. 

Crude Oil: Crude oil price continues to move well inside familiar price range with the price action of both major international benchmarks displaying clear historical pattern on headlines influenced cues. Cues from US President Trump’s speech later today will provide a clear short term directional bias. 

AUD/USD: The pair is seeing consolidative price action slightly below mid-0.68 handle post previous session’s decline. Firm USD and broad-based risk-averse trading activity in the forex market along with caution surrounding Sino-U.S. trade deal weighs AUD bulls keeping pair under significant bearish bias.

On The Lookout: On the economic calendar schedule, North American market hours saw a silent US and Canadian calendar owing to a lack of release of any major data. However, there is a speech from US President Donald Trump at the Economic Club of New York later in the day.

President Trump’s speech has been under the trader’s radar since the trading session began yesterday, especially after the conflicting headlines surrounding the trade deal, which came out last weekend. Investors and analysts are on the lookout for any mention of trade deal-related comments given Trump’s comments over the weekend, stating that trade talks with China were moving along very nicely while white house officials made it clear that no actual plan has been made for the rollback of Chinese tariffs. Traders want a clear picture of the exact scenario to determine if and when the rollback of tariffs on Chinese goods will occur and also expect timeline information for Phase one of the trade deal.

trump's speechOn Brexit front, odds remain in favor of PM Boris Johnson as there have been no new developments in pre-election polls post Farage’s comments yesterday. On the earnings calendar, traders await quarterly reports from Advance Auto Parts, CBS, Dr. Horton, Rockwell Automation, and Tyson Foods. 

Trading Perspective: Broad-based caution ahead of Trump’s speech later in the day will keep major forex currency pairs trading in red in early North American market hours. Comments from Trump hinting at the rollback of tariffs will help risk currencies gain momentum while any signs of further delay in a trade deal or lack of details on rollback of tariffs will push risk currencies on further declines.

US futures trading in the international market saw upbeat activity ahead of Wall Street opening on expectations for positive comments relating to Sino-U.S. trade deal from US President Donald Trump during his speech later today which along with positive cues from the European market suggests Wall Street will see a positive opening for the day. 

EUR/USD:  The pair is trading with dovish bias in the global market but remains trapped inside a short price range. Positive EU area macro data underpins EURO bulls preventing further declines, while cautious ahead of Trump’s speech later today and firm USD keeps the pair under strong downward pressure. The pair needs to hold steady above the major support level of 1.10 to prevent sharp declines. 

GBP/USD: The pair is trading with negative bias but remains well near previous session highs, having managed to hold on to strong support above the 1.2800 handle. Farage comment induced support for GBP continues to remain strong offsetting strong pressure from firm USD and broad-based cautious investor sentiment ahead of US President Trump’s speech later today. 

USD/CAD: The pair is trading positive with price scaling fresh one month highs as USD bulls gained strength and support for upward momentum on broad-based risk currency sell-off in the forex market. But weaker US bond yields and positive oil price underpins CAD keeping gains in check. Traders now await US President Trump’s speech scheduled later in the day for directional bias. 

Please feel free to share your thoughts with us in the comments below. 

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