Conflicting headlines on surrounding Sino-U.S. trade war scenario keeps the market under pressure. US data and Poloz’s speech in focus.
Summary: Global equities continue to decline as Sino-U.S. trade deal talks continue to extend with no-signs of positive resolution in the foreseeable future. Tensions between China and the USA escalates to new highs with each passing day as the US Senate passed two additional bills supportive of protestors in Hong Kong with an open warning to China about human rights legislation.
Further, declining odds of phase 1 trade deal being signed before the end of the year also weighed down investor risk appetite considerably. European shares continue to see sharp slide as cues from trade deal proceedings and Hong Kong protests cause serious damage to the trade-dependent economy in the form of decline in economic growth outlook forecast.
In the forex market, USD declined slightly but broad-based cautious investor sentiment remains steady capping gains and keeping major forex pairs trapped well within familiar price range.
Precious Metals: Despite broad-based cautious investor tone, precious metals are trading in red as costly USD capped fund flow for the rare metals market. However, demand for safe-haven assets amid escalating geopolitical woes keeps the price from declining below key support levels.
Crude Oil: Crude oil price rose sharply in the global market over news that China has invited US officials for talks on a trade deal. Further Reuters report which stated OPEC and its allies are likely to extend output cuts until mid-2020 also added support for crude oil bulls.
AUD/USD: The pair is trading positive as USD weakened over the news of talks between China and US officials. However, broad-based cautious investor tone continues to keep gains capped well below the mid-0.6820 handle.
On The Lookout: Conflicting trade deal-related headlines keep investors in their toes. While tensions escalate on US senates bills over Hong Kong Autonomy and human rights protection, investors held back from placing major bets as China requested US officials to visit for further talks on Phase 1 of the trade deal.
On UK elections front, despite slight unrest following televised debate between two figureheads contenting in the election, opinion poll results which continue to show PM Johnson in lead helped improve odds of swift Brexit resolution helping market see some level of positive sentiment.
On the release front, traders await ECB meeting minutes, US Philadelphia Fed Manufacturing index data, existing-home sales data and Canadian ADP Non-Farm Employment change data and speech from BOC Governor Poloz for short term trading and directional cues.
Trading Perspective: Forex market is likely to maintain range bound momentum as traders await further headlines from the US before placing major bets. US futures trading in the international market saw slight upward move erasing declines from an early week as reports of US officials heading to China for talks on a trade deal and tariff decisions influenced some level of strength to market bulls albeit prevalent cautious investor tone keeping gains in check. On earnings calendar front, Wall Street will see the release of quarterly data from Intuit, Macy’s Inc, Nordstrom and Ross Stores.
EUR/USD: The pair is rising toward 1.11 and is currently at its highest since November 5 as news of China’s request for US officials to visit China for trade talks improved risk appetite. USD’s weakness added strength to EURO bulls, but broad-based caution keeps gains in check as traders await further headlines and macro data for short term directional bias.
GBP/USD: The pair has managed to gain a strong foothold above 1.29 handle following the release of post-televised debate opinion polls which still saw PK Boris Johnson maintain his lead. USD’s weakness added strength GBP’s rally causing it to scale past mid-1.29 but the pair has since turned range-bound around the 1.2945 handle as GBP lacks the strength to hold steady above the 1.295 handle. Traders now await US data for short term profit opportunities and directional bias.
USD/CAD: The pair continues to trade with positive bias but has lost its bullish momentum and entered consolidation rally as USD lost strength in the global market. Canadian Loonie gaining strength on Crude oil price recovery also added pressure to USD bulls. But broad-based cautious investor sentiment helped prevent pair from seeing sharp decline resulting in pair retaining hold above the 1.3300 handle. Traders now await US & Canadian macro data and BOC Poloz’s speech for short term directional bias.