Earnings report outlook hurt European equities, US macro data and upcoming fed interest rate decision in the center stage of investors focus.
Summary: Asian market today saw major benchmark indices, equities, and high-risk assets trade positive influenced by positive investor sentiment ahead of US Fed interest rate decision meeting. Australian market also saw positive price action in Pacific-Asian market hours supported by lingering influence from tech shares gains made in the previous session. Meanwhile, the first face to face talks between China and US representatives on trade-related negotiations post G20 summit in Japan earlier this year began today, however, there hasn’t been any update or groundbreaking headlines from the representatives so far today.
In the European market, equities took a sharp bearish hit owing to disappointing profit forecasts from German giants Bayer and Lufthansa. Brexit woes influenced by newly appointed PM Boris Johnson’s hardball approach also added to risk-averse trading activity in the European market. As USD remains firm ahead of upcoming FOMC interest rate decision meeting, major forex pairs trade in red.
Precious Metals: Precious metals are trading with mixed momentum in the global market today amid divided investor sentiment and contrasting activity in Asian and European equities. While gold has managed to hold steady above $1420 handle, the price of gold declined slightly amid firm USD while Silver traded positive in the global market.
Crude Oil: Crude oil is trading positive in the global market despite demand skewed in favor of crude oil bears as investor sentiment got a positive boost owing to face to face trade negotiations between China and US begins in shanghai today. China being top crude oil importer in the globe, expectations of progress in trade talks underpin crude oil bulls.
AUD/USD: The pair hit fresh six week lows today. The pair’s dovish price momentum comes from weak AUD bulls which are pressured by RBA rate cut speculations. Further, Trump’s less than optimistic comments on trade-related negotiations with China also hurt the Chinese proxy AUD. Investors now await Fed interest rate decision for directional cues.
On The Lookout: All investor focus is now on China – U.S.A trade negotiations taking place in Shanghai. However, given recent comments from US President Trump, traders don’t expect much of a favourable outcome in an ongoing meeting. Aside from trade talks, the other major event for the week is the US FOMC interest rate decision when Fed members are expected to cut interest rates. Brexit woes are continuing to take its toll on the European market with both parties playing hardball increasing the odds of a hard Brexit outcome later this year.
In immediate future, all focus is on US macro data updates – Core PCE Price Index, Price Deflator, Personal Spending, CB consumer confidence and Pending Home Sales which are will provide short term trading cues in North American market hours. In the US earnings calendar, reports from Apple, AO Smith, AMD, Electronic Arts, Merck & Co, Master card, Ralph Lauren and Xerox are in focus.
Trading Perspective: US Stock and Index futures trading in the international market ahead of Wall Street opening saw dovish price action for the second consecutive session as all eyes remain on upcoming fed interest rate decision meeting. Given mixed action in the global equity market and investor caution ahead of the Fed meeting, US Wall Street is likely to see subdued opening today.
EUR/USD: The pair traded positive in the global market earlier today, but the mixed outcome in EU macro data resulted in price being capped below 1.1160 handle post which the pair is trading range-bound in the global market. Traders now await US macro data for short term profit opportunities.
GBP/USD: The pair recovered from multi-month lows hit in the previous session but gains were capped owing to strong dovish influence in the global market stemming from Brexit woes. Increasing odds of hard Brexit outcome is likely to keep GBP’s gains in check in the near future while traders wait for US macro data for short term profit opportunities.
USD/CAD: The pair is trading with positive bias in the global market today, but gains have been capped owing to Crude oil gains which underpin commodity-linked currency Canadian Loonie. For now, the pair remains capped below 1.3200 handle, but the positive outcome in US macro data later today could help the pair scale above 1.32 handle in North American market hours.
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