Chinese stocks finished higher as Sino–US trade talk optimism boosts sentiments. The Shanghai Composite Index is set for the best day since June 2015 adding more than 5 percent to 2,961. In Tokyo, the Nikkei225 gained 0.5 percent to 21,528, and Hong Kong’s Hang Seng finished 0.4 percent higher at 28,959. The ASX 200 in Australia advanced 19 points or 0.31 percent to 6,263, supported by the headlines that the US and China are close to reaching a trade deal.
In commodity markets, crude oil is trading 0.19 percent lower, while gold is trading higher to $1328 per ounce and the U.S. dollar index is trading 0.05 percent lower at 96.44.
European indices started the week in a positive tone with DAX adding 0.47 percent to 11,511, the CAC40 rising 0.31 percent to 5,231 and FTSE100 in London gains 0.29 percent to 7,199.
On the Lookout: The Telegraph reported that the Brexit would be delayed for up to two months under plans being considered by Theresa May to extend Article 50. In macro news, the New Zealand retail sales surged 1.7% during Q4 2018 and the Japan Leading Economic Index came in at 97.5, below expectations (97.9) in December.
The economic calendar is also rather empty today in the US: the Chicago Federal Reserve national activity index is released with the Dallas Fed manufacturing index.
For the week, we expect the US housing starts and consumer confidence tomorrow; Eurozone confidence surveys, US trade and factory orders, and Canadian CPI on Wednesday along with the Fed’s Powell’s semi-annual testimony, which is the same day USTR Lighthizer also speaks; Thursday has China’s PMIs, German CPI, and US Q4 GDP and the Chicago PMI; Friday has another Powell speech, Eurozone CPI, and US personal income/spending and ISM surveys.
Trading Perspective: The USDCNH is trading at the lowest levels since July 2018 amid the trade talk optimism, Kiwi also benefiting from an upbeat New Zealand’s retail sales report and is trading at 0.6878 against USD. The Aussie dollar tested and broke above the 0.7150 barrier opening the way for 0.72.
EURUSD is trading sideways in early European session adding 0.12 percent to 1.1346; the pair still trades between the longer term trading range between 1.12 to 1.15 which sketched the last three months. Strong resistance stands at 1.1394 where two daily moving averages cross. On the downside, the pair will find protection at the 100-hour moving average in 1.1335 area. Open interest in EUR futures markets increased by nearly 8K contracts on Friday from Thursday’s final 528,323 contracts, recording the first build after three consecutive pullbacks. Volume, instead, prolonged the choppy performance and shrunk by almost 67.1K contracts.
GBPUSD is moving with an eye in Brexit related headlines. The technical picture is neutral to positive with major resistance standing at the highs around 1. On the flipside, the 1.30 psychological mark is providing support where more buying interest will be met at the 1.2882 region where two hourly moving averages are crossing.
In GBP futures markets, investors added around 1.5K contracts to their open interest positions on Friday vs. Thursday’s final 194,637 contracts. On the other hand, volume dropped for the third session in a row, this time by nearly 27K contracts.
The USDJPY is trapped in a narrow trading range since mid-January with a slightly positive slope to the upside. A break above the 111 level will give bulls a boost to target the 200-day moving average at 111.30, while strong support for the pair stands at the 50-day moving average at 109.97.
In JPY futures markets, the open interest rose by just 185 contracts on Friday vs. Thursday’s final 185,068 contracts, recording the second build in a row. Volume, instead, remained erratic, this time declining by around 17.7K contracts.
