Fed rate cut expectations and weak USD boosts risk on trading activity in the global market, US PPI inflation data awaited for short term trading cues.
Summary: Asian and European markets are seeing stocks and benchmark indices trade positive today. Positive influence coming from increased expectations of fed rate cut decision later this month is one of the major factors supporting the ongoing risk on price momentum. While the US macro calendar yesterday saw better than expected CPI data outcome, it failed to stop US Dollar’s decline in the global market. This along with the decline in major global bonds saw increased fund flow into risk assets across Asian market hours today.
In European market hours, gains in mining firms and bank shares led a short burst of the positive rally earlier in the day. However, a profit warning from German automaking giant Daimler hurt auto share stock price across European market capping gains in mid-European market hours. The positive influence from bank & mining firm shares continues to provide support to market bulls keeping major stocks and benchmark indices in European market trading in green. In the forex market, weak USD has resulted in major global currencies denominated against USD gain the upper hand in both Asian and European markets.
Precious Metals: While risk appetite is high in the global market, Fed rate cut expectations influenced weaker dollar, and recent decline in the price of precious metals caused activity in precious metals market to see an increase today from emerging markets. Safe haven demand from prolonged geopolitical events also added support to precious metal demand leading to steady positive price action so far today.
Crude Oil: Crude oil price in the global market is seeing range bound activity with slight positive bias as the price of both Brent and WTI benchmarks hit their highest since May. Escalating tensions in the Middle East over the UK seizing Iran crude shipment and Iran-U.S. woes, Gulf of Mexico storm, extended supply cut agreement from OPEC members serve as factors supporting crude oil bulls in the global market.
AUD/USD: The pair is trading positive today having extended its recovery activity with price moving above 0.70 handle, but further gains remain capped over strong resistance. Mixed Chinese trade data also hurt AUD’s momentum. However, USD weakness influenced price rally continues to underpin AUD bulls helping the pair maintain bullish price action as the trading session comes to close for the week.
On The Lookout: As trading session approaches week’s closing all major macroeconomic release aside from US inflation data have hit the market. Given the market’s reaction to better than expected US CPI data yesterday, a positive outcome in US PPI data later today could provide some short term impetus but overall momentum is likely to remain unaffected. Traders across the globe await fed interest rate decision meeting this month as cues from Fed Chair Powell’s speech earlier this week caused expectations surrounding rate cut decision to raise even more than before early week decline. On the geopolitical events front, nothing major is expected to transpire during the weekend, be it on Sino-U.S. front or on Brexit front. Later next week, voting on UK PM candidate succession will be completed and Theresa May’s successor will finally be decided.
Trading Perspective: The trading session for the day ahead is likely to be influenced by short term profit booking activity in forex markets while Wall Street indices and equities will continue to ride global market momentum. US stock and index futures trading in the international market ahead of Wall Street opening saw positive price action on increasing bets surrounding fed rate cut decision hinting at positive opening and activity in US Wall Street later today.
EUR/USD: The pair is trading with positive bias for the third consecutive trading session today but there is strong resistance towards further upside move with pair seeing multiple hurdles between 1.1280 to 1.1300 handle in immediate future. US weakness influenced rally continues to underpin EUR bulls for now as traders await US PPI data for short term profit opportunities.
GBP/USD: The pair is trading positive in the global market today owing to USD weakness influenced price rally. While GBP continues to suffer dovish pressure from Brexit and political uncertainties in the UK, it has already been priced in owing to lack of fresh progress. Lack of macro data release from the UK also adds strength to GBP. Traders now await US PPI data for short term profit opportunities.
USD/CAD: The pair hit new monthly lows despite attempts to consolidate loss near mid-1.30 handle earlier today. Gains in crude oil price in the global market and news of storm in the Gulf of Mexico continues to underpin crude oil price providing indirect support to CAD bulls in the broad market which combined with USD weakness caused the pair to plummet today. Traders await US PPI data for short term profit opportunities.
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