Summary: Asian market today saw major benchmark indices take on mixed performance with most equities and benchmark indices on key Asian markets aside from Singapore close in red for the day. Traders continue to exercise caution as they await inflation data from major global economies and cues from corporate earnings reports.
European market opened positive but saw major benchmark indices trade flat on mixed earnings data from major European firms. Chipmaker ASML, mobile network equipment manufacturer Ericsson and Swedish pharmaceutical firm Orphan Biovitrum saw positive earnings reports while major Swedish banks Handelsbanken & Swedbank saw dovish outcome offsetting cues from earnings update of each other. In the forex market, despite fed rate cut expectations, USD remains steady as major global currencies decline on geopolitical and central bank woes.
Precious Metals: Both precious metals are trading positive in the global market today as cues from dovish price action in major global economies boost safe-haven demand. Further, cheap USD in which precious metals are denominated led to increased participation from emerging markets on account of low exchange rates which also provided positive support to precious metal bulls.
Crude Oil: Crude oil saw both major international benchmarks – WTI & Brent trade with positive bias across Asian and European market hours. Draw in US API weekly crude oil inventory data was the main driving force behind momentum while tensions in the Middle East extended supply cut agreement by OPEC and Sino-U.S. trade war cues also added strength to crude oil bulls.
AUD/USD: The AUD/USD pair is trading with slight dovish bias as bulls managed to prevent a decline below 0.70 handle despite hitting an intra-day low of 0.6998 earlier in the day. The decline was influenced by a decline in iron ore futures as iron ore is one of the major export of Australia. However, weak USD on account of Fed rate cut bets also acted as cushioning force capping declines.
On The Lookout: The major release in the European market hour today – UK & EU inflation data saw a mixed outcome. UK calendar saw CPI and PPI data drop worse than expected but the same had already been priced in by most traders as UK economy suffers from an onslaught of Brexit uncertainties and internal political turmoil in ruling Tory party. Meanwhile, the European calendar saw CPI data come out with better than expected result helping offset dovish cues from disappointing UK macro data. On the geopolitical front, neither Brexit nor Middle Eastern or Sino-U.S. conflicts saw progress resulting in lack of fresh cues which affect long term price momentum of major risk assets. Moving forward, North American market hours will see the release of US Building Permits and Housing Starts data and Canadian CPI and Manufacturing data updates which along with earnings release of Bank of NY, Bank of America, Netflix and eBay are likely to provide short term trading cues.
Trading Perspective: While USD remains weak in the global market on expectations of fed rate cut decision, major currencies remain pressured by risk-averse investor sentiment and geo-political woes which suggests Forex market will continue to see bears dominate forex market in North American market hours. Despite positive cues from positive earnings in US bank earnings updates, growth woes and monetary policy proceedings influence cautious investor sentiment leading to US stock futures and benchmark index futures trading in the international market ahead of Wall Street opening saw subdued activity today. While Wall Street is likely to see a subdued opening, positive outcome in macro data and earnings reports will keep major indices trading in green.
EUR/USD: The pair is currently trading near weekly lows Euro is pressured by dovish ECB expectations. But positive EU CPI data helped limit declines. A new round of USD selling in European market hours helped the pair reverse early loss and trade with positive momentum and the pair is trading near 1.1215 handle. Traders now await US data for short term profit opportunity.
GBP/USD: The pair saw sharp declines earlier in the day on pressure from Brexit woes. Further dovish UK macro data also weighed down the pair. But positive EU macro data and a round of USD selling in late European market hours helped the pair erase early loss and trade with a positive bias above 1.2410 handle. Traders now await US data for short term profit opportunity.
USD/CAD: The pair is trading with dovish bias as a draw in US API weekly crude oil data resulted in crude oil price trading with a sharp upward boost in price action. Commodity-linked currency Loonie is strong when crude oil traders positive. Plus USD sell-off in late European market hours also added support to CAD bulls. Traders now await US & Canadian macro data for short term profit opportunities.
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