Markets on Mixed Activity over Divided Investor Sentiment

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.

brexit

Markets on Mixed Activity over Divided Investor Sentiment on Sino-U.S. Trade Talks

February 15, 2019

brexit Divided InvestorCautious mood in market combined with Dollar’s strength in resulting in mixed activity in Forex markets while equities see relatively positive price action.

Summary: Equity and Forex markets are seeing mixed price action today on divided investor sentiment owing to multiple geo-political events occurring today. While global markets exhibited optimism over proceedings of Sino-U.S. trade talks, market turned cautious as talks between two nations began today. Investors decided to hold back from placing major bets on risk assets and booked profits on recent gains as ongoing Sino-U.S. trade talks is likely to decide whether a trade deal will be signed by both nations and dovish outcome could plunge global markets into another long phase of bearish price action. Meanwhile European markets see investors await UK parliament meeting update as Brexit proceedings are currently heading towards no-deal exit scenario which also has high potential to plunge global economy on bear’s path. Further, cautious investor sentiment combined with upbeat US CPI data has helped Greenback regain strength and re-establish its dominance over Forex market during Asian market hours today.

Precious metals: Precious metals market has changed much since yesterday. Given their status as safe haven assets owing to immunity against economic volatility, fund flow from investors who wish to avoid loss of funds owing to geopolitical events occurring in market today are keeping precious metals trading above critical price level despite Dollar’s strength capping gains.

AUD/USD: The pair saw sharp two move as Australian dollar gained upper hand earlier in the day owing to momentum gained from upbeat Chinese macro data. However strong US dollar in broad market and caution surrounding Sino-U.S. trade talks erased all gains made earlier in the day and resulted in range bound action near intra-day lows.

USD/JPY: Strong US Dollar in broad market owing to upbeat US CPI data resulted in pair hitting new 2019 highs earlier today. But as trading session progressed, investors booked profit on recent gains and decided to redirect funds to safe haven assets as investor sentiment turned cautious owing to Sino-U.S. trade talks which begins today. Further dovish US macro data added to bearish pressure on dollar resulting in pair seeing sharp drop in favor of Japanese Yen.

us presidentOn The Lookout: Investors focus is on Sino-U.S. trade talks which begin today. While investors exercise cautious, headlines hint at positive progress but trader want solid headlines once meeting concludes tomorrow hinting at trade deal until which investor sentiment is likely to be divided. On UK parliament session, law makers are likely to support PM May in her approach despite her comments that UK will exit on March deadline as she has asked law makers to wait patiently for some more time and decide on further approach during meeting on February 27, which gives more time for her to negotiate some kind of deal with EU. However investors are likely to wait headlines for any chance in political climate. Chinese inflation data and speech from Australian central bank assistant governor Christopher Kent are expected to provide some short term profit opportunities during Pacific-Asian market hours later in the day.

Trading Perspective: Given divided investor sentiment, Forex market is likely to see range bound action. However, headlines inspired optimism surrounding Sino-U.S. trade talks are likely to inspire positive action in U.S. equity markets.

US Indices: Major US indices are likely to move range bound today as index futures trading in international market saw mixed action. While sentiment in equity markets remain high on comments from US President Donald Trump who stated that talks were going very well and that he was considering pushing back deadline for Chinese tariff’s from March 1, 2019 by another 60 days, futures traded in red as investors awaited final update on talks post tomorrow’s trade talk conclusion.

EUR/USD: EURUSD pair is trading in zig zag fashion as US dollar is seeing bulls and bears wage war for control. While cautious investor sentiment and upbeat CPI data from last night helped USD regain positive price action, disappointing US macro data released earlier today resulted in USD losing ground and EURO scaling back above 1.13 handle. But the pair fell below 1.1300 mark shortly as EURO bulls lack strength to sustain rally above said price level resulting in range bound action above 1.1290 handle.

USD/CAD: While US Dollar lost some ground in broad market following disappointing US macro data, disappointing outcome in Canadian macro data offset bearish influence and Dollar managed to retain its strength from earlier in the day resulting in sharp upside move. This resulted in the pair moving above 1.33 handle and establishing steady upward price rally. Further a decline in Crude oil price in spot market added to Loonie’s woes. Given USD’s strength in broad market the greenback is expected to maintain positive price action across today’s American market hours.

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