EU-UK talks and US headlines to set pace of price action in global financial market as trading session comes to close for the week.
Summary: US Wall Street last night saw major indices and stocks close on dovish note as whistleblower accused US President Donald Trump of pressuring Ukraine to investigate one of his co-contenders in upcoming US Presidential elections. Asian markets opened on dovish note following cues from US market and maintained dovish price action across the day with several key stocks declining to 3-week lows. At end of Asian trading session, most major markets in Asia closed on dovish note for the week. However, declines in Asian market were capped on comments from Chinese representative Mr. Wang Yi who stated Beijing is willing to buy US products and commented trade talks would yield positive results if both sides take enthusiastic measures as show of goodwill instead of using pessimistic language in trade dispute between two parties. Following comments from Chinese diplomat, optimism surrounding trade talks rose significantly overpowering dovish influence from US President Trump’s impeachment proceedings. This helped European market open and trade on positive note. Further, decline in sterling influenced positive action in London stock market which further boosted performance of risk assets in European market. In forex market, improved trade optimism has helped most major global currencies trade positive against US Greenback as trading session began for the week.
Precious Metals: Both gold and silver are trading in red today. Firm USD in the global market continues to hurt demand for yellow metal resulting in spot gold seeing worst week in nearly six months as trading session comes to close for the week. Improved risk appetite further capped gains in precious metals market while trump impeachment proceedings helped cap decline in precious metals.
Crude Oil: Crude oil price is seeing mixed activity in international market as spot and futures are seeing varied directional move in price action. In European market hours, improved optimism surrounding trade talks underpin crude oil bulls while US sanctions on Chinese super tanker for allegedly shopping crude oil out of Iran also helped crude oil price see positive price action in the global market.
AUD/USD: The pair traded flat earlier in the day on firm USD and cues from US Wall Street which offset risk appetite. But improved optimism surrounding trade talks which helped improve risk appetite in the global market later in the day underpinned AUD bulls resulting in the pair gaining positive momentum. However recovering US Bond Yields keeps AUD’s gains in check.
On The Lookout: As trading session comes to close for the week, fresh updates on geo-political events continue to inspire short term price volatility. Comments from Chinese diplomat Mr. Wang Yi who was involved in verbal spat with US President Trump earlier this week on changing tone of trade talks helped improve investor mood and brought in fresh wave of optimism surrounding positive outlook for trade talks. On Brexit front, latest proceedings hint at increased odds for no-deal exit as PM Boris Johnson seems intent on grasping at any available straws and loop holes to make no-deal exit possible unless EU budges while EU stands firm on its stance making it clear that no-deal outcome is highly likely. Talks between EU & UK representatives later in the day also remain in focus. There are no new developments in Middle Eastern political climate as trading sessions comes to close for the week. Traders’ attention now lies on US macro data updates and headlines from Washington for short term profit opportunities.
Trading Perspective: In forex market, major global currencies are likely to continue trading positive but gains are more likely to be kept in check on account of firm USD which is backed by recovering US bond yields. US T.Yields rose following yesterday’s better than expected US GDP price index update and goods trade balance data. US stock and index futures trading in international market were flat earlier in the day on overnight cues from Wall Street and Trump impeachment woes. But improved trade talk optimism in European market hours helped US futures see positive price action. Wall Street is likely to see positive opening later in the day but gains are likely to be capped as traders await US data and local headlines for trading cues. On economic calendar front, US calendar sees release of core durable goods orders, PCE price index, personal income and spending data and Michigan consumer expectations and sentiment data for short term profit opportunities.
EUR/USD: The pair was trade well near two year lows around 1.090 handle as USD remained firm. However EURO bulls gained momentum following boost in trade talk optimism which helped price edge towards mid-1.09 handle in European session. Traders now await US macro data for short term profit opportunities.
GBP/USD: The pair traded dovish earlier in the day on firm USD and Brexit uncertainties. However, comments from BOE member Michael Saunders stating central bank may cut interest rates helped ease pressure on GBP. Further shift in focus to ongoing EU-UK talks for directional cues resulted in pair trading range bound ahead of NA market hours and outcome will helped provide directional bias.
USD/CAD: The pair is trading in red despite firm USD as the pair was weighed down by Trump impeachment proceedings earlier in the day. Improved trade optimism and spike in crude oil price on US Sanctions on Chinese supertanker also boosted commodity linked currency CAD’s bulls. Traders now await US macro data and headlines for short term profit opportunities.
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