European Equities Move Up on Fresh Trade Deal Cues, US Home sales in Focus

Chinese spokesperson’s comment on trade deal inspired mixed market reaction, caution influenced by trade deal and uncertainties stemming from Trump impeachment proceedings to keep Wall Street subdued.

Summary: Asian market continued to display mixed activity amid lack of solid progress in trade deal proceedings. However, European markets gained upper hand on headlines driven speculative trade gaining a break from recent Brexit woes pressured price momentum. Fresh update from China in European market hours which saw new list of tariff exemption on US imports and comments from  Chinese commerce ministry spokesperson reiterating commitment to move ahead with Phase 1 of trade deal helped improve risk appetite. In Forex market, major currencies trade flat given mixed geopolitical cues as USD remained relatively immune to Trump’s impeachment proceedings.

Precious Metals: Rare metals market saw positive price action as US President Donald Trump’s impeachment proceedings brought about a sense of uncertainty albeit failing to have any visible impact on risk assets. Lack of upward move from USD also provided safe haven bulls with some fundamental support.

Crude Oil: Crude Oil price is trading positive in the global market as US EIA weekly crude oil inventory data saw drop in stockpile which helped push price upwards. A low US stockpile combined with extended supply cut from OPEC would mean less of a glut scenario in Q1 of 2020 which is better for demand to supply ration providing liquid gold with fundamental support.

AUD/USD: The pair is trading positive today with price remaining well near weekly highs across Asian and European session as AUD bulls gained positive support from Australian job data led gains. Comments from Chinese official reiterating commitment for phase of trade deal along with flat USD also provided AUD bulls with fundamental support for today’s positive price action.

On The Lookout: As week comes to close, there isn’t much to look forward to aside from macro data updates and upcoming UK parliamentary vote on Brexit deadline amendments. Pre-holiday market sentiment has began to emerge in US and European markets. While Chinese spokesperson today reiterated commitment towards trade deal, he made it clear that timeline detail won’t be made public anytime soon but exact details on trade deal will be made public once the agreement is signed by both parties. While this brought about a sense of optimism which drove speculative short term trades, it also had an adverse medium term effect as caution began to escalate given the possibility for trade deal timeline being pushed into q1 of 2020. On Brexit front, UK parliament is set to vote on PM Johnson’s latest declaration which will see Brexit resolution deadline be cut short to end of 2020. Given recent landslide victory, the motion is likely to be passed in UK parliament tomorrow which has caused speculation of no-deal Brexit possibility to rise once again. On the release front, North American market hours will see release of Canadian Wholesales data, US Philadelphia Fed Manufacturing index and Existing home sales data. Later in Pacific-Asian market hours, global macro calendar is scheduled to see release of Japanese National Core CPI and Chinese PBOC Loan Prime Rate.

Trading Perspective: While US home sales data may provide USD with some level of fresh directional bias, forex market is unlikely to see any major shift in current directional price momentum as geo-politics dominate medium term directional cues. US futures were flat in international market following US House of Representative move which saw US President Trump become third president in USA history to be impeached. While the proceedings now move to Senate, the republican controlled senate is unlikely to evict President Trump from his seat. However, the uncertainty brought about by this move which is expected to affect upcoming US Presidential elections has put market in a state of lull which suggests Wall Street is set to see subdued opening and price action in US market hours today.

EURUSD: The pair continues to hold fort above 1.11 handle and is trading positive in the global market today as EUR remains strong on broad based investor sentiment while flat USD on Trump impeachment proceeding also added support to EURO bulls. Traders now await US macro data for short term profit opportunities and directional cues.

GBP/USD: The pair is continuing to trade with dovish bias for third consecutive session today as caution influenced by Brexit uncertainty woes keeps the British Pound under mountain of pressure. However, flat but firm USD helped cap decline ahead of tomorrow’s key UK parliamentary vote on PM Johnson’s new Brexit amendment causing traders to await US data for short term profit opportunities.

USD/CAD: The pair is trading flat in the global market for fifth consecutive session trapped well inside lower half of 1.31 handle as data and headlines driven price momentum lacked strength for either currency to gain a major change in directional strength. Traders are now focused on today’s US home sales and Canadian Wholesale sales for short term profit opportunities.

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