Asian markets saw positive price action while European indices and equities opened positive on healthy risk appetite and easing Brexit woes but headlines on Sino-U.S. trade deal hinting at delay of final meeting resulted in limited gains and increased caution among global investors.
Summary: Global market today saw positive price action in all major stocks and equity indices across key stock exchanges in Asian and European markets. As concerns surrounding Sino-U.S. trade talk which was major driving force behind price action in global market till early March has calmed down in recent past and Brexit woes which had been gripping market since start of the week is also seeing investor concerns slowly easing away, risk appetite has boomed in global market. While most major stock exchanges in Asian markets saw positive price action, Shanghai stock exchange saw dovish close for the day owing to concerns of slowdown in industrial activity following release of worse than expected industrial production data. Despite EU stating that they are not ready to negotiate a new trade deal with UK and expect credible justification in case of any request for delaying article 50 deadline from UK, analysts believe that the request will be granted to avoid impact of messy Brexit on both economies. This has helped ease most of concerns and worries stemming from Brexit resulting in positive price action in European equity market. Major Forex pairs aside from EUR/USD & GBP/USD are trading positive on increased risk appetite today but Brexit woes and rebound in USD has led to range bound price action with bearish bias in both currency pairs mentioned above.
Precious Metals: Both Gold and Silver saw decline in spot and futures markets as demand for safe haven eased once Brexit woes evaporated from the market. With neither Sino-U.S. trade talk updates nor Brexit woes to left demand for safe haven assets and rebound in US dollar in broad market, precious metals saw increased bearish pressure in today’s Asian and European trading session. Further, increased risk appetite saw fund flow change direction towards equity and forex market while participation from emerging markets decreased resulting in dovish price action in precious metals market today.
USDJPY: The USDJPY pair saw sharp upside move during American market hours as news that UK parliament has voted against no-deal Brexit scenario hit market. Further, rebound of US Greenback in broad market supported by increased risk appetite during Asian market helped the pair stage a sharp upside move above mid-111 handle. However, news that China & U.S. are likely to delay their scheduled meet for finalising trade deal to month of April renewed concerns for trade war escalation between both parties resulting in Japanese yen gaining some momentum resulting in pair seeing decline from intra-day highs during European market hours but downside was limited well above mid-111 handle.
AUD/USD: The AUDUSD pair closed positive over last three consecutive trading sessions despite disappointing macro data from Australia as AUD bulls were able to capitalise on increased risk appetite and weak USD influenced by disappointing US macro data and declining US Treasury Yields but saw sharp decline today as dovish cues from Chinese equities finally managed to have visible impact on price action of AUD. Further, USD’s rebound in broad market put increased pressure on major global currencies adding to bearish pressure on Australian Dollar resulting in sharp dovish nose dive earlier today but loss from early declines could be reversed if US macro data scheduled to release later today sees disappointing outcome.
On The Lookout: Investors focus is on UK parliament meeting for updates on how lawmakers wish to proceed further as best possible outcome in current scenario would be to initiate second Brexit referendum. However, it is now clear that lawmakers would vote to extend article 50 deadline in parliament meeting today and EU would likely grant the request to extend deadline for Brexit as messy exit will have dire consequence on both EU & UK economies. Traders have already priced in extension of deadline into their trades today resulting Brexit woes easing in market and major equities and indices in Europe and UK trading positive ahead of parliament meeting. While risk appetite remained high in Asian and European market hours, investor sentiment turned cautious in mid-European market hours on news that meeting between China & U.S.A. for finalizing trade deal between two nations has been pushed from late March to early April with comments from US Trade Representative Robert Lighthizer stating that some of key issues remain unresolved. Further, Trump’s comment which expressed his opinions that there is no rush to close trade deal between two parties which is well in contrast with his statement earlier this month also weigh down risk appetite. Investors now await US macro data for short term profit opportunities. US macro calendar today will see the release of Import & Export price indices and New home sales data. Investors are also on lookout for tomorrow’s Bank of Japan’s interest rate decision as it could greatly affect price action in Pacific-Asian market hours.
Trading Perspective: Given increased caution during late European session owing to headlines on China-U.S. trade talks, risk appetite has taken a blow but there is still decent level of risk appetite in market. This suggests that depending on outcome of US macro data today, US Wall Street is likely to see major indices and equities see range bound price action with bearish bias.
EUR/USD: The pair saw sharp fall since Pacific-Asian market hours as US dollar rebound in broad market but high risk appetite capped decline in Asian market hours. However, risk appetite took a hit following news of Sino-U.S. trade talks resulting in pair seeing sharp decline in European market hours. Investors now await update from UK parliament meeting and US macro data for directional cues.
GBP/USD: The pair traded well above 1.33 handle despite seeing decline early in the day as Brexit woes eased and risk appetite remained high in market. Sino-U.S. trade deal update had no impact on price action as all eyes are focused on today’s UK parliament meeting with hopes for possibility of second Brexit referendum and extension of article 50 deadline, while US macro data is eyed for short term profit opportunities.
USD/CAD: The USDCAD pair saw sharp upside move today as USD regained strength in broad market and Crude oil price which backed CAD bulls declined in broad market following hitting new 2019 highs. Further, news of Sino-U.S. trade deal hurt risk appetite in the broad market, boosting USD’s momentum even higher resulting in steady upside move across the day. Investors now await US macro data for short term directional cues and profit opportunities.