Crude Oil

European Equities Stalled, Crude Oil Hits New 2019 Highs, US Data Eyed For Short Term Cues

Crude OilDovish influence from Brexit woes and disappointing EU macro data boosted concerns of economic slowdown capping gains in European equities albeit trading in green. Investors await US macro data for short term profit opportunities.

Summary: Global equity market is seeing positive price action for second consecutive trading session today. All major equities and benchmark indices across key stock exchanges in Europe and Asia are seeing solid positive price action. Optimism surrounding Sino-U.S. trade talks, macro data from China & U.S.A. which saw better than expected Manufacturing PMI updates yesterday were the main factors supporting market bulls. An upbeat manufacturing PMI is a sign that manufacturing activity remains healthy in both economies despite the ongoing trade war between both nations. This helped ease investors concerns of the global economic slowdown to a great extent resulting in Asian market seeing positive price action despite lack of high impact news or macro data updates. However, gains in European market are limited today despite positive price action as Brexit woes and disappointing EU area macro data continues to weigh investor sentiment in European markets. Major Forex pairs are also seeing mixed price action in European market hours.

Precious Metals: Both gold and silver are seeing dovish price action for second consecutive session today. The dovish price action was influenced by improved risk appetite in US and Asian market and profit booking activities leading to sharp decline but cautious investor sentiment in European market helped precious metals stabilize on some level of save haven demand resulting in rangebound price action.

Crude Oil: Crude oil price is also trading positive in global market today with price of WTI hitting new 2019 highs during Asian market hours. The price per barrel remains steady above $60 handle in both Asian and European market hours. While OPEC production and supply cut enforcement continues to underpin crude oil bulls news of another round of US sanctions on Iranian crude oil and Venezuelan port closing operations boosted positive influence helping crude oil bulls on their upward price action today.

AUD/USD: The pair saw sharp downside move in global market today following Australian central bank’s interest rate decision update. During post MPC update press conference the central bank members cautioned about global economic slowdown despite prevalent risk on investor sentiment. This caused the pair to see sharp declines during Asian market hours but prevalent USD’s weakness helped the pair rebound from intra-day lows and trade rangebound slightly above session lows in European market hours.

Sino-U.S. trade talksOn The Lookout:  Both EU and UK macro data updates saw dovish outcome today. But they failed to have any visible impact on price action in equity markets. While EUR/USD & GBP/USD pair are trading in red, their downside price action is more a result of Brexit woes and concerns of economic slowdown influenced by widening spread difference between government bond yields rather than today’s macro data updates. Geo-political issues seem to remain as the main focus of investors but neither Brexit nor Sino-U.S. trade talks made any solid progress today. With less than 11 days left for UK’s Brexit deadline, UK lawmakers indecisive nature has slowed down progress even more when compared to PM May’s attempts earlier this year. While headlines pertaining to geo-political events continue to dictate price action in the global market in long term, macro data updates and headlines decided short term directional cues. Amid lack of major impact headlines, broad based investor sentiment will continue to dictate overall price action in global equity and Forex markets.

Trading Perspective: Major Forex pairs await US macro data from late European market hours for directional cues while equity market will see positive price action across the day in Wall Street supported by risk on investor sentiment.

US Indices: Major US benchmark index futures – S&P 500 and NASDAQ futures trading in international market are positive ahead of Wall Street opening. A positive outcome in macro data update in US calendar – core durable goods order data later today will add further positive support to investor sentiment. Forecast for US macro data also hints at positive outcome. This suggests that Wall Street will likely see positive price action on prevalent risk appetite and optimism surrounding Sino-U.S. trade talks.

EUR/USD: The EURO has been trading in red for seventh consecutive trading session today. Dovish ECB forward guidance, disappointing macro data updates, widening spread difference between US & DE government bond yields and Brexit woes are some of the factors that have kept EURO under pressure so far. Investors await US macro data update for short term cues and positive outcome in same will lead to further declines for EURO today pushing the back below 1.1200 handle towards scaling 2019 lows once again.

USD/CAD: The pair continues to trade well near 1-1/2 weak lows as Loonie bulls are supported by influence from positive crude oil price in the global market. While the pair managed to climb above previous session lows during American session, crude oil price scaling new 2019 highs gave Loonie strong support to reverse overnight recovery rally resulting in bearish price action holding steady in Asian and European market hours. Investors now await US macro data update for short term profit opportunities.