Central bank cues underpin market bulls while Trump’s comments on keeping trade deal un-signed until Hong Kong protests are resolved caps gains.
Summary: Global stock market is seeing positive price action today on receding fears surrounding the possibility of economic recession and central bank stimulus cues. Following last week’s cues on fresh German government announcement of plans to ditch balanced budget to counter recession outcome, cues from Chinese central bank’s key interest rate reforms also added a positive influence to investor sentiment boosting risk appetite in the market.
Following positive opening and price momentum in major benchmark indices and key risk assets in the Asian market, European market took on cues from the Asian market and saw positive price action in risk assets. Further, gains in Deutsche bank shares also added strength to market bulls in European market hours helping key European benchmark indices to trade positive today. In forex markets, USD recovered strength and gains were capped in check, but prevalent risk appetite underpinned major currencies resulting in mixed activity among top forex pairs.
Precious Metals: Precious metals are seeing dovish price action today. Both Gold and Silver traded with dovish bias as USD regained strength owing to a recovery in US T.Yields while the boost in broad-based risk appetite also added to decreasing demand for safe-haven assets.
Crude Oil: Crude oil is trading positive in the global market today as economic outlook stabilized on central bank stimulus cues. Further, news of drone attack on Saudi Oil field also affected demand to supply ratio skewing price in favor of crude oil bulls.
AUD/USD: The pair is trading with dovish bias today despite the rise in 10-yr Australian government bond yields. The dovish influence comes from Trump’s comments hinting at a delay in the trade deal and a rebound in USD weighing down AUD bulls, and it is likely to continue trading in red for the rest of the day.
On The Lookout: In the immediate future, all eyes are focused on proceedings of Sino-U.S. trade negotiation related headlines. US President Donald Trump and white house officials downplayed recession worries in US market commenting impact of China-U.S. trade war hasn’t caused a major impact on US economy and that sales/consumption/demand still continue to rise, hinting at flourishing on positive business activity. While Trump also mentioned talks between US and China negotiators which could lead to meet in the USA later this month leading to an end in trade war, he said he is also not interested in signing a trade deal at the moment and wants Hong Kong protests to be resolved first as he believes it will help the US gain more benefits once a trade deal is signed.
Brexit seems to be heading towards hard Brexit outcome, but UK remains unprepared given the leak of operations Yellowhammer details and lack of fast response team to keep economy intact while the PM remains steadfast on the exit date. Today’s calendar is silent on release front during North American market hours. However, central bank stimulus cues and positive investor sentiment influenced cues from international market are likely to keep major assets in US market in bulls’ territory.
Trading Perspective: As USD remains strong owing to a recovery in US T.Yields, risk appetite influenced positive support for major global currencies are offset by USD bulls. This suggests the status quo will remain unchanged in the forex market in American market hours. US Index and stock futures trading in the international market saw positive action ahead of Wall Street opening on news of Trump’s talks with Apple CEO Tim Cook over the impact of a trade war on the firm. Broad-based investor risk sentiment is also expected to keep market bulls sustained in north American market hours, suggesting bullish price action on Wall Street today.
EUR/USD: The pair is trading positive in the global market despite mixed macro data outcome as positive equity market activity and German government decision to scrap balanced budget plan added strength to EURO bulls while USD’s rebound on recovery in US T.Yields kept gains in check. Traders now await fresh cues from US market for short term profit opportunities.
GBPUSD: The pair is trading in red as British Pound is pressured from multiple fronts. Increasing odds of no-deal Brexit, lead of yellowhammer operation details are major factors weighing GBP bulls. However, USD’s rebound on recovery in US T.Yields also kept GBP under pressure. Traders now await fresh cues from US market for short term profit opportunities.
USD/CAD: The pair opened with a dovish bias earlier in the day scaling multi-session lows near mid 1.32 handle as Crude oil grew strong on news of drone attack on Saudi Oil fields. However, the decline was offset by a recovery in USD owing to rise in US T.Yields which caused the pair to erase early losses and traded flat ahead of US market hours. Traders now await fresh cues from US market for short term profit opportunities.
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