Dovish cues from US Wall Street and Asian markets amid holiday thin activity in Asian markets influenced bearish price action in European markets despite most major indices and equities opening positive today.
Summary: US market yesterday saw major benchmark indices and equities close in red. Dovish cues from Fed Chair Powell’s comments, lack of positive tone in Fed forward guidance amid holiday thin market weighed on investor risk appetite resulting in dovish price action in Wall Street. Japan and Chinese markets remain closed today. However, other major markets namely Singapore, Australia and India saw dovish price action in Asian market hours over dovish cues from US Wall Street and cautious investor stance amid holiday thin Asian markets. However, European markets opened on positive note ignoring cues from international market. Positive updates from Italy, French and Euro area economic calendar added further support to healthy risk appetite in European market. While US Dollar fell post Fed policy meeting update, it had managed to recover overnight loss in Asian market hours post which it is trading in consolidative mode in the global market. Forex market saw positive price action in both Asian and European markets.
Precious Metals: Precious metals are trading with bearish bias in global market today. While Fed forward guidance lacked positive tone, it suggested that there won’t be a rate cut in near future. This along with Dollar’s rebound in the broad market earlier today caused Gold to decline while silver traded range bound with slight bearish bias.
Crude Oil: Crude oil price fell sharply in the global market as US EIA weekly crude oil inventory data released yesterday showed a sharp build in inventory. This combined with news that Iranian crude oil worth over $1 billion is locked outside Chinese ports ahead of US termination of Iranian sanction waivers added to pressure on crude oil bulls causing price to decline over 1% in the global market.
EM FX Asia – China and Japan markets remained closed today limiting trading volume in Asian market hours. Korean Won, Taiwan Dollar and Indonesian Rupiah traded positive while Thai Baht, Malaysian Ringgit and Philippines Peso traded with dovish bias in the global market.
On The Lookout: Macro data calendar schedule for US remains relatively silent today. European market saw release of PMI updates which mostly had positive outcome. While European equities traded positive earlier in the day, most major benchmark indices turned dovish ahead of US Wall Street opening. US market will see release of Preliminary Q1 Nonfarm productivity data and Unit labour costs data and Factory orders data for March which is likely to keep price action volatile to some extent in Wall Street today. Headlines suggests positive progress on Brexit front, while Sino-U.S. trade talks is yet to see any new unique headlines hit market post US representatives visit to China earlier this week. Cues from geo-political events will continue to remain as the main driving force behind the price action in major global markets the week ahead.
Trading Perspective: Wall Street is likely to see relatively positive price action today with major indices aiming to recover losses incurred during previous trading session. Healthy risk appetite is likely to support market bulls resulting in positive price action in Forex markets as well.
EUR/USD: The pair continues to trade above 1.12 handle having rebound from overnight lows influenced by Fed forward guidance update. Positive macro data updates from Euro area also added strength to EURO’s momentum. Investors now await US macro data updates for fresh trading cues.
GBP/USD: The pair traded positive earlier in the day as overnight headlines hinted at cross party talks between May and Corbyn are likely to end with a mutually agreeable Brexit deal. However, BOE’s reduction in 2019 inflation forecast caused British Pound to surrender early gains and trade in red. Traders now await US macro data updates for short term trading cues and profit opportunities.
USD/CAD: The pair traded range bound in the global market well near previous session highs as decline in crude oil price and strength for US Greenback stemming from Fed forward guidance supports USD bulls. While the Fed update lacked positive tone, the update suggested it is unlikely for the fed’s to cut rate in immediate future supporting positive price action in USD as traders await macro data updates for trading cues.
