European Equities

European Equities Rebound, US PMI in Focus

smooth Brexit
Brexit updates

Market opens for the week with divided investor sentiment as caution lingers despite China’s efforts while smooth exit of the UK from the EU provided fresh relief

Summary: As the trading session opened for the week, Asian markets saw major indices continue to decline sharply as coronavirus outbreak woes stemming from china still continues to hinder risk appetite. However, European market opened on relatively positive note as UK finally saw a clean exit from the EU on 31st January 2020 as previously agreed by both parties. The relief from smooth exit provided major European indices with a sharp boost at start of the session.

In the forex market, major currency pairs are seeing mixed activity in European session.

Precious Metals: Rare metals are seeing slump in price action despite dovish opening in Asian session as smooth Brexit provided fresh relief in European session. Divided risk sentiment caused safe haven demand to decline however price of gold and silver still remain above key support levels. 

Crude Oil: Crude oil price is seeing divided activity in global market on conflicting headlines. While the coronavirus death toll woes and decreased demand outlook weighs crude oil bulls, reports from OPEC considering deeper cuts provided some support to bulls resulting in short ranged price oscillation. 

AUD/USD: The pair is trading positive today having recovered slightly from four month lows. However, firm USD in global market keeps gains in check. For now the pair seems to be trapped around 0.6700 handle awaiting macro data updates for trigger to break past the hurdle around said level. 

On The Lookout: The week ahead is likely to see more headlines on Brexit proceedings as EU and UK begin trade deal related negotiations following smooth exit from EU last week. Tensions are already escalating as EU wants UK to stick as close to EU regulations are possible to ensure free trade activities while PM Johnson aims at an approach with more flexibility and freedom in trade deal similar to one between EU and Canada. North American market is set to see release of earnings report from Alphabet Inc, parent firm of global tech giant Google and key PMI release from American macro calendar schedule. 

Trading Perspective: Wall Street seems all set for a relatively positive opening later day on mixed cues from global market. While Asian markets closed dovish, efforts from China to curb the virus outbreak and positive cues from European market hint at relatively risk on investor sentiment in the global market. US ISM Manufacturing PMI set to release later in the day and Alphabet Inc earnings will provide Wall Street with directional bias. 

EUR/USD: The pair saw price chip away some of its gains from last Friday’s session as UK-EU trade deal related headlines came as blow to EU bulls. However, the pair still holds steady around 1.1080 handle while traders wait for US PMI’s and ECB Lagarde speech for directional cues. 

GBP/USD: The pair opened for the week on dovish note and remained steady near intra-day lows around 1.3000 handle. While Brexit trade deal concerns come as blow, firm USD underpinned by recovering US T. Yields also add pressure to GBP bulls. Traders wait for US PMI for short term profit opportunities. 

USD/CAD: The pair is trading flat today with a clear lack of directional bias. Both currencies are firm but lack strength for break out. USD is underpinned by recovering US T. Yields while slight recovery of crude oil price on reports of OPEC’s deeper supply cut consideration underpins CAD bulls. Traders now await US data for directional bias and profit opportunities. 

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