Sino-US trade talks

Markets Rally on Trade Deal GBPUSD at Twelve-Month Highs  

Asian indices finished higher after positive news that the phase one trade deal between China and the USA is very close. The deal will cancel the new tariffs to Chinese imports due on December 15th, while it will also reduce by 50% the tariffs on 360 billion products. China will increase the purchase of agricultural products from the USA.

European Central Bank kept the interest rate policy unchanged as was expected by markets and lowered its growth forecast for 2020.

The Nikkei 225 index ended 2.55% higher at 24,023. The Hang Seng index is 2.57% higher at 27,687. The Singapore FTSE Straits Times benchmark ended 0.61% higher at 3,214, while the Shanghai Composite is 1.78% higher at 2,967. The ASX 200 finished 0.50% higher at 6,739.  

European indices also started the session stronger, DAX is 1.35% higher at 13,400, the CAC40 is 1.25 per cent higher at 5,957 while the FTSE MIB in Milan is 0.86 per cent higher at 23,592. In London, FTSE 100 is 1.58% higher at 7,387 as the conservatives secure a major victory in UK elections. 

In commodities markets, crude oil trades 0.96 per cent higher at $58.95 close to two-month highs after OPEC+ agreed to cut oil output by 500,000 barrels per day until June.

Brent oil is trading 1.25% higher at $63.84 per barrel as crude oil demand will be affected by the global growth slowdown. Gold prices trade higher at 1,471, after stronger NFP data last Friday, and USD weakness across the board as the short term turns negative after the gold prices trade below the 20-day moving average and below the 50 and 100-day moving averages. On the upside, major resistance stands at 1,555.13 YTD high, while support is at 1,448 the recent low.       

In crypto markets, BTCUSD correction continues at 7,195, hitting the daily low at 7,164 and the daily high at 7,230. Bitcoin momentum is still bearish as the cryptocurrency trades below the 50 and 200-day MA. Immediate support for bitcoin stands now at $6,510 recent low, while the next support holds at 6,000 round figure.

On the upside, resistance stands at 9,925 high and then at 10,000 round figure. ETHUSD also trades lower at 142.68 with capitalization now at 15.73 billion, immediate resistance for Ethereum stands at 200 recent high while the support stands at 139.71 daily low, Litecoin is also under selling pressure at 43.24. The crypto market capitalization stands at $197.09 billion.

In the Lookout: In Japan, the Tankan Non – Manufacturing Index came in at 20 above expectations of 16 in 4Q.  The Tankan Large All Industry Capex registered at 6.8% above forecasts of 6%, and the Tankan Large Manufacturing Index came in at 0 below estimates of 2 in 4Q. 

The central bank of China (PBOC) set the Yuan reference rate (USDCNH) at 7.0156 versus yesterday’s settlement at 7.0253.


Trading Perspective: In fx markets, the USD index trades 0.11 per cent higher at 96.84, the AUDUSD trades 0.11 per cent higher at 0.6916, while NZDUSD trades 0.33% higher at 0.6618. USDCHF is 0.10% lower at 0.9835.

12-month highs
GBPUSD Weekly Chart

GBPUSD trades at 12-month highs 1.81% higher at 1.3401  after the Conservatives won the elections as we are getting closer to the Brexit deadline on January 31st, 2020. The first support for GBPUSD now stands at 1.2578 recent low which if broken, might accelerate the slide further towards 1.20. On the other hand, immediate resistance will be met at 1.3511 recent high.

EURUSD trades 0.47% higher at 1.1178 as the pair’s momentum has turned positive for the short term. Immediate resistance for the EURUSD stands at 1.1199 recent high. On the downside, the first support is at 1.1131 today’s low and then at 1.11.

12-month highs
EURUSD Daily Chart

USDJPY is trading 0.37% higher at 109.69, having hit the daily low at 109.15 and the daily high at 109.69. USDJPY pair will meet support at 105.44 the low from August 22. On the upside, resistance for the USDJPY now stands at 109.69 recent high.

USDCAD is trading 0.15% lower at 1.3158, and the pair will find support at 1.3017 the yearly low while extra support stands at 1.30 round figure. On the other hand, resistance will be met at 1.3355, the top from September 3rd, before an attempt to 1.3450, top from 31st May.