Contradictory statements from China and US boost caution in the global market while Italian political scenario developments helped improve investor sentiment in the European market.
Summary: Asian market today saw key risk assets – benchmark indices, equities and F&O’s trade positive on cues from Wall Street. US President Donald Trump’s comments yesterday stating that trade war will be resolved soon as China is ready to reinitiate trade talks despite recent hike in tariffs on both ends influenced some level of positive price action in the global market. However, China’s comments refuting US Treasury Secretary Steven Mnuchin’s statement that there was no telephone call between representatives of both nations caused investors to take on cautious stance as investors began to doubt credibility of further updates surrounding the events. European market saw major indices and equities open on dovish note as declines in stocks from London Stock Exchange initially created a dovish investor sentiment. However, developments in Italian political scenario hinting at possibility of new coalition forming soon helped improve investor sentiment causing European market to trade with mixed momentum today. In forex market, caution surrounding unreliable trade war updates weighs down USD causing major global currencies to see some level of gains.
Precious Metals: Both gold and silver are trading positive in the global market today. The bullish price momentum in precious metals was influenced by increasing demand for safe-haven assets owing to uncertain trade war cues while weak USD also added support to precious metal bulls.
Crude Oil: Crude oil price is seeing positive price action in the global market today with both major international benchmarks trading up by 1% on the day. While uncertainties surrounding Sino-U.S. trade war capped gains, the supply-demand ratio remains supportive of crude oil bulls underpinning positive price action.
AUD/USD: The pair is trading flat as AUD bulls are weighed down by Sino-U.S. trade war woes influenced dovish cues. Weakness surrounding USD influenced by declining US T.Yields helped keep declines in check causing the pair to maintain neutral momentum.
On The Lookout: The Geo-Political cues will continue to keep forex market highly volatile as contradictory comments from major powers make investors highly doubt the reliability of proceedings of the event and truthfulness of the update. On Brexit front, Jeremy Corbyn and opposing party MPs decide to prioritise a legislation preventing no-deal Brexit which if gets approved in UK parliament would put a dent on Boris Johnsons’ plans. Investors continue to remain hopeful for positive resolution in trade talks between China and US but China will only move forward if US decides to play fair (fair as per Chinese standards) which puts proceedings back at square one prolonging a tense market environment. On the release front today, traders await US CB consumer confidence data aside from which economic calendar schedule remains silent. In immediate and near foreseeable future safe-haven assets will remain strong in global market on cautious investor sentiment.
Trading Perspective: Weak USD will continue to underpin positive price action of market global currencies while cautious investor tone will keep gains in check in American market hours in the forex market. US Stock and index futures trading in the international market saw positive price action ahead of Wall Street opening as investors hopes for swift resolution to trade war albeit mixed cues from involved parties.
EUR/USD: The pair is trading trapped within familiar price levels as cues from internal and international geopolitical woes affected EURO bulls while neutral macro data had no visible impact on price action. Meanwhile, weak USD influenced by declining US T.Yields helped prevent sharp dovish declines. Traders now await US macro data for short term profit opportunities.
GBP/USD: The pair is trading with a strong bullish bias today as British Pound was supported by decision from opposing party members who agreed to push through with a resolution to prevent no-deal Brexit outcome in UK parliament, while weak USD also added strength to GBP bulls. Traders now await US macro data for short term profit opportunities.
USD/CAD: The pair is trading with dovish bias today with price declining to two-week lows as US Dollar was weakened by slide in US 10 year government bond yields while a spike in crude oil price underpinned commodity-linked currency Canadian Loonie causing the pair to decline below mid 1.32 handle. Traders now await US macro data for short term profit opportunities.
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