Trade deal headlines influenced both caution and risk sentiment in the global market. Fresh updates awaited before risk assets in the global market display a clear directional bias.
Summary: Global equities are seeing a sharp upward spike in price action following cues from the USA as China as the US signed a trade deal yesterday, which when combined with positive earnings from US banks, provided equities with bullish fundamental support. While the Asian market opened positive for the day and displayed a bullish tone across the session, gains were capped as details of the trade deal caused concerns possible negative impact on other global economies.
However, broad-based positive tone lingered steady resulting in not just Asian but European markets also seeing positive price action. As short term outlook turned positive following trade deal-related headlines aside from major indices, forex markets also saw major currencies trade with a positive bias against US Greenback in the global market.
Precious Metals: Rare metals saw a sharp slide in price action across the global market as trade deal headlines brought forth a fresh wave of risk on trading activity in the global market. However, declines were relatively low as trade deal headlines influenced concerns of economic impact and weak USD helped retain some level of demand for safe-haven assets.
Crude Oil: Crude oil price recovered to some extent in the global market as the trade deal was signed between China and the USA. While most tariffs do remain unchanged, a trade deal green light is a sign that Chinese businesses are going to see a boost which suggests increased demand from the world’s largest importer. US EIA crude oil weekly inventory data also supports positive crude oil price action today.
AUD/USD: The pair started off for the day on a consolidative note. However, the price of AUD soon shot up on broad-based risk on trading activity and trade deal headlines influenced fundamental support for AUD bulls. USD’s flat tone in the global market also aided AUD bulls to some extent resulting in pair scaling above 0.69 handle and tapping fresh 1½ week highs today.
On The Lookout: Investors’ focus continues to remain on China-USA trade deal updates. While the news that the trade deal was signed provided some relief temporarily, fresh concerns popped up as targets set in the bilateral trade deal seem too high.
Analysts and experts in various major economies feel that China’s drive to meet US trade targets may affect its business with other nations while European Union trade chief has stated he will examine the trade deal in detail to ensure it is compliant with global rules as the draft seems sketchy. Aside from trade deal-related updates, traders await earnings from US banks – Morgan Stanley, BNY Mellon, and US retail sales data for short term profit opportunities.
Trading Perspective: Broad-based investor sentiment displays a risk on mood and US futures trading in the international market is seeing positive activity over trade deal headlines and bank earnings.
Cues from the Asian and European markets also show signs of fundamental support in favor of market bulls which suggests Wall Street is set to see record activity in the North American trading session today. In Pacific-Asian market hours, traders will see the release of Chinese GDP, Unemployment rate and industrial production data.
EURUSD: The pair traded with positive note earlier in the day following the release of ECB meeting minutes which displayed a bullish tone. The pair managed to test mid-1.11 handle but failed to maintain a steady hold above the same. Traders now await US retail sales data for short term profit opportunities.
GBP/USD: The pair is trading with positive bias for a third consecutive session today albeit Brexit drama which progresses in the background affecting its gains. Broad-based USD’s weakness provided GBP bulls with some level of support during today’s rally. Traders now await US retail sales data and fresh Brexit headlines for profit opportunities and directional cues.
USD/CAD: The pair failed to create a breakout today despite broad-based risk on investor sentiment. Trade deal progress helped Crude oil price spike upwards providing positive fundamental support for Crude oil bulls but CAD lacked the strength necessary to trigger a sharp downside move. The outcome of US retail sales data will decide if USD managed to regain control of price momentum from CAD bulls.
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