Equities Positive on Data Driven Momentum, USD Declines on Rate Cut Bets

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.

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Equities Positive on Data Driven Momentum, USD Declines on Rate Cut Bets

July 16, 2019

Summary: Global market is seeing equities and major benchmark indices open positive for the week on macro data-driven momentum. Better than expected Chinese macro data proved to be a positive trigger for market bulls helping major indices and equities see positive price action across Asian market hours. European market took positive cues from bullish momentum in the Asian market and positive Chinese data.

However, gains were cut short owing to cues from Germany’s weak economic outlook. Comments from Germany’s economic ministry stating that its industrial activity is sluggish and recent data suggests slower growth in service sector gave a serious blow to market bulls erasing nearly 1% of gains. In the forex market, USD continues to decline on account of rising fed rate cut bets and this has helped major global currencies gain upper hand. 

Precious Metals: Silver is trading positive on cheap USD while Gold is trading in red. Participation from emerging markets on account of weak USD kept declines in check but gains in equities and prevalent risk on trading activity curbed demand for gold resulting in yellow metal trading in red. 

Crude Oil: Crude oil price saw relatively flat momentum in the global market today. While fundamentals were favouring positive price action most supporting factors such as Middle East tensions, Sino-U.S. trade war woes, US inventory data and Mexican gulf storm have already been priced in and lack of fresh cues capped gains. 

AUD/USD: The pair is trading positive on USD weakness driven price momentum. Further, positive cues from upbeat Chinese macro data and market activity today supported the AUD which is considered Chinese proxy owing to trade ties and dependent economy between two nations. 

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Sino-US trade war

On The Lookout: The macro calendar schedule for the day ahead lacks major release in the US and Canada today. Broad-based investor sentiment, cues from international markets will continue to act as a major driving force for market bulls in the American market today. On the geopolitical front, this week will see an announcement of the candidate who succeeds Theresa May as next Prime Minister of UK. Tensions in the Middle East remain high but there isn’t any major update or change in status quo at the moment. On the Sino-U.S. trade war front, there is any progress in real sense aside from the usual threat attempts by Trump to try and make China budge to its demands. Traders await US Citi group earnings for trading cues. 

Trading Perspective: Weak USD on account of rising fed rate cut bets will continue to influence major USD denominated currency pairs to see positive price action in US market hours. US index and stock futures trading in the international market ahead of US Wall Street opening saw positive price action which suggests Wall Street will open positive today. Cues from bank stocks influenced by Citi earnings report will dominate price momentum for a great part of the day. 

EUR/USD: The pair opened positive for the day but soon lost its gains and was trading flat trapped within intra-day price range limit as dovish ECB expectations and German economic outlook weighed down the common currency. But the decline was limited on account of weak USD and the pair is likely to remain range bound near 1.1260 to 1.1285 during North American market hours. 

GBP/USD: Despite prevalent weakness surrounding USD, the pair is trading with dovish bias and is one of the weakest performing currency pair as GBP was weighed down by Brexit woes. Further, caution and profit booking activity ahead of PM succession announcement later this week caused the pair to decline to fresh daily lows well near the 1.2525 handle to the 1.2535 handle and is likely to remain range-bound below 1.1245 for rest of the day. 

USD/CAD: The pair is trading with dovish bias since the trading session started for the day on prevalent USD weakness. Further, positive crude oil price, better than expected Chinese macro data served as factors underpinning commodity-linked currency Loonie. USD is likely to remain weak on raising fed rate cut bets resulting in pair trading near multi-month lows and heading towards 2019 lows in American market hours. 

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

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