Equities Mixed Albeit Prevalent Bullish Bias & Stimulus Cues, Canadian Retail Sales in Focus 

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.

trade war

Equities Mixed Albeit Prevalent Bullish Bias & Stimulus Cues, Canadian Retail Sales in Focus 

September 21, 2019

Contradicting account from White house official hurt risk appetite while central bank stimulus underpins risk appetite. 

Summary: Global stock market is seeing divided price action as the trading session comes to close for the week. Asian market saw major benchmark indices and key stocks across all key markets aside from Hong Kong trade and close on a positive note. The positive price action was influenced by improved investor sentiment on account of policy easing measures from major central banks across the globe. Further, update from China stating that it had reduced the one-year benchmark lending rate yet again as a measure to lower borrowing costs in a trade war hit economy was also welcoming news.

The European market took cues from the Asian market and opened on a positive note. Major benchmark indices and key stocks got further push for positive price action influenced by gains in retail and defense sector shares. However, tensions stemming from the Middle East and increasing worry surrounding supply to demand ratio post-attack on Saudi Arabia has caused European and Middle Eastern markets to see divided price action on key assets. Forex market is seeing major global currencies decline against USD as Greenback remains strong on support received from recent Fed FOMC meeting update

Precious Metals: Rare metals market is seeing positive price action despite firm USD in the broad market. Demand for safe-haven assets stems from middle eastern tensions and investor concern on conflicting comments about trade talks from two white house advisers. 

Crude Oil: Crude Oil continues to trade positive and is headed for positive weekly closing with a nearly 7% increase in value on both major international benchmarks. Despite comments from the US & Saudi to boost efforts for normalization of supply, rising tensions in the middle east and supply to demand ratio in the current market continue to underpin crude oil bulls influencing positive price action today. 

AUD/USD: The pair slid to 2-week lows as odds of a rate cut by RBA increased. But the pair rebounded from lows and erased most of the loss as USD saw selling activity albeit USD bulls remaining well supported. The pair is trading flat as all attention turns towards an update on the progress of trade talks. 

On The Lookout: Geo-Political events remain as the major driving force of global economic market this week. While fresh stimulus measures from China was a welcoming wave of positive influence, tension and caution among global investors continue to remain high influenced by several major events. Face to Face Trade talks between deputy level representatives began yesterday, but conflicting comments from two white house officers have put traders and investors in caution causing the market to remain flat awaiting further developments before placing major bets. Amid a lack of directional bias, key assets are trading divided.

Canadian Retail Sales
EU President Juncker

Tensions in the middle east continue to escalate to new highs following Saudi attack and there doesn’t seem to be any signs of immediate and positive resolution of issues in the Middle East any time soon.  However, comments from EU president Juncker came as welcoming and refreshing change as he stated that he had indeed received a proposal from UK PM Boris Johnson and will do everything in his power for a possible Brexit deal outcome as he believes a no-deal Brexit would be devastating for both economies. Juncker stated that Brexit could be achieved even if Irish Backstop is removed as long as proper alternatives are put in place of backstop agreement. 

Trading Perspective: Forex markets are likely to see range-bound activity on cautious investor sentiment as traders await further updates from Sino-U.S. trade talks before placing major bets. US futures trading in the international market saw positive price action ahead of Wall Street opening on stimulus measures from major global central banks. But cautious investor sentiment is likely to result in subdued opening and price action in US Wall Street later today. Traders now await Canadian retail sales data and speech from US FOMC members Rosengren and Williams for short term profit opportunities. 

EUR/USD: The pair is trading in red as the EURO is weighed down considerably by disappointing German PPI data and conflicting updates on Sino-U.S. trade talk progress. However, expectations of stimulus measures from Germany helped the pair keeps its loss contained. The pair is now trading below mid-1.10 handle and awaits further updates on trade talks based on which it could either enter free fall or move back above 1.105 handle as the trading session comes to close for the week. 

GBP/USD: The pair scaled fresh two month tops on optimism surrounding Brexit following comments from EU President Juncker who hinted at the possibility of Brexit deal. Traders now wait for further cues on Brexit progress as all eyes turn towards talks between EU chief negotiator Michael Barnier and UK Brexit Secretary Stephen Barclay. Positive outcome in trade talks will boost pair further while negative cues from trade talks will push the pair below 1.25 handle all the way towards mid 1.24 handle. 

USD/CAD: The pair is trading positive in the global market today despite commodity-linked currency Canadian Loonie’s strength on positive price action in the crude oil market as USD remains supported by investor caution surrounding contradictory comments on Sino-U.S. Trade talk progress. Traders now await Fed Speech and Canadian retail sales data outcome. The cues from FOMC member speech will decide on the directional bias of the pair, which will decide whether the pair closes for the week above or below 1.3300 handle.

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

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