The global market today saw mixed price action in the Asian and European market hours as investor concerns of global economic slowdown remain steady despite slightly easing yesterday.
Summary: Today’s Asian and European market hours are seeing mixed price action in most major stock exchanges and Forex pairs. Asian market saw all major stock exchanges aside from Chinese & Hong Kong markets trade and close in red over lingering concerns of a slowdown in the global economy. Meanwhile, European markets saw all major indices bleed in red as investor sentiment has taken on clear risk-averse tone owing to Brexit uncertainties and disappointing German macro data updates. Further, activity in the bond market suggests that the global bond market is still deep inside the pits as evident from bond yield movement so far this week. Activity in bond market continues to provide solid fundamental support for the possibility of the global market having entered a phase of recession, and speech from key figures of major central banks across the globe also hinted at a slowdown in global economy. These factors have created a scenario of risk-averse trading activity this week. Forex market is seeing mixed price action as USD has regained some strength on a rebound in US T.Yields but hasn’t made any major breakout price action in major Forex pairs.
Gold: Gold is seeing positive price action in the global market today supported by increased demand for safe-haven assets. Risk-averse trading activity in Forex and equity markets influenced by geopolitical issues and concerns of a recession on major global economies has resulted in steady fund flow into the safe-haven market. This has helped yellow metal maintain positive price action during Asian and European market hours which is likely to continue during American market hours.
Crude Oil: The price of crude oil declined in both spot and futures markets today. The decline was initiated by the release of US API weekly crude oil stockpile data which showed a significant build in inventory. However, the support for steady downside price action in crude oil was influenced by concerns of a slowdown in the global economy.
USD/JPY: The pair saw sharp downside price action during Asian and European markets as risk-averse trading activity dominated Asian and European market hours. Increased demand for safe-haven assets also underpinned demand for Japanese Yen resulting in downside action despite USD gaining strength on a rebound in US T.Yields.
On The Lookout: The main focus of investors is now on today’s UK parliament’s House of Commons session. While headlines continue to hint at some level of support for PM May’s deal and the possibility of a third vote on her Brexit deal, the scenario is unlikely as PM May lacks enough backers to initiate a third vote. The main focus will be on various Brexit amendments and indicative vote that will decide the direction of future proceedings and possible decisions that could help break out of the current stalemate scenario. Aside from UK parliament updates, investors focus will be on US trade balance and crude oil inventory data which will provide directional bias and short term profit opportunity in forex market during American market hours. Wall Street is likely to see range bound action with little possibility for gains as US T.Yields still remain at levels that reinforce investors concerns for a recession in the US economy.
Trading Perspective: Trading activity in the US will see small level bets and moderate activity from retail traders, but major moves are unlikely in both Forex and equity markets during American market hours.
US Futures: US index futures traded in red in the international market as investor sentiment was tainted with global growth fears. The activity of the US government bond yields continues to support investor’s views on possible recession in the US economy. Cues from the international market and cautious investor sentiment are likely to result in risk-averse trading activity with range bound action in major wall street equities during American market hours.
GBP/USD: Headlines driven momentum resulted in the pair seeing sharp upward spike well above 1.32 handle. However, the pair lacks fundamental support to retain a stable rally above 1.32 handle or maintain positive momentum as investors await updates on UK parliament’s indicative votes regarding further Brexit progress. Unless post-Parliament session update hints at a decision that could result in the breakout of current stalemate scenario, regardless of timeframe for Brexit delay, the pair will resume bearish price action.
EUR/USD: The pair saw two-way price action today with all gains made in Asian session erased post-speech from ECB Governor Mario Draghi. Draghi reiterated his concerns for economic slowdown with overall speech seeing a high dovish tone causing EURO bulls to lose strength in the market. US dollar regained strength on a slight rebound in the US T.Yields. Investors now await US macro data updates for short term directional cues.
