Fading trade deal optimism likely to keep gains in check, traders await quarterly data from Qualcomm, century link, Baidu, Fox Corp, and Expedia.
Summary: Global equities continue to see positive price action today, but the positive price momentum which was influencing the price rally has begun to slow down. The rally from the early week was influenced primarily by headlines surrounding the trade deal.
While the headlines showed signs of talks surrounding deal-making progress, after nearly five days of nothing concrete aside from headlines, traders have grown weary of the proceedings. Amid lack of progress, lingering optimism keeps market bulls underpinned but price action today was mostly influenced by local headlines and macro data updates.
Following mixed close in Asian markets, the European market saw major indices and key stocks open positive on cues from upbeat service sector data from the EU area. But market bulls were weighed down by mixed earnings reports capping gains leading to key indices turning Rangebound. Forex market remains flat as major global currencies retain recent gains but firm US dollar continues to prevent major currencies from posting any gains.
Precious metals: Rare metals are seeing mixed price action today with silver trading in red while gold continues to trade positive. Fading optimism surrounding the trade deal gave momentum to gold. But firm USD and lingering risk sentiment keep silver in red and gold’s gains contained within short price range.
Crude Oil: Crude oil price declined for the first time this week as optimism surrounding trade deal eased in the global market. Further, larger than expected build in US weekly crude oil inventory data also weighed down demand to supply ratio in favor of crude bears pressuring price of liquid gold in the global market.
AUD/USD: The pair is trapped in a tight range below the 0.69 handle as the cautious tone in the market today influenced by fading Sino-U.S. trade deal-related optimism keeps AUD bulls under pressure. Broad-based demand for USD also added pressure to AUD while lingering risk appetite kept gain on both sides in check.
On The Lookout: Activity in the global financial market has reached a state of limbo today as risk appetite fades on easing optimism surrounding the Sino-U.S. trade deal. Analysts and Traders are beginning to consider the possibility that this could be history repeating itself where headlines drive short term price momentum for a while but the momentum fades quickly as there is no concrete progress in proceedings of the trade deal between two nations.
On the Brexit front, EU’s Juncker continues to express contempt over UK’s attitude towards the Brexit approach while on UK’s front there is no major change and all hands are on deck for an election that could likely end up making and breaking Brexit. There are no high impact macro data updates albeit economic calendar showcasing second-tier data release from both American and Canadian calendars set to release in North American market hours which suggests broad-based investor sentiment and earnings reports are set to influence price action in Wall Street tonight.
Trading Perspective: Despite easing optimism surrounding trade deal, lingering positive influence has enough strength to keep US futures trading in the international market to see positive price action across the day ahead of Wall Street opening.
US futures were well shielded today from cautious tone clearly visible across Asian and European markets. This suggests the possibility of US market opening on a positive note today albeit with the possibility of gains being capped on account of the dovish forecast for US Non-Farm productivity data. The economic calendar will also see the release of US unit labor costs, EIA weekly crude oil inventory data and Canadian IVEY PMI data in North American market hours.
On the earnings calendar schedule, Wall Street sees the release of quarterly financial data from Baidu, Broadridge, Century Link, Devon Energy, Expedia, Fox Corp, and Qualcomm.
EUR/USD: The pair continues to trade with a positive bias above mid-1.10 handle but gains are capped as USD remains strong on cautious investor sentiment over fading optimism surrounding Sino-U.S. trade deal. Traders now await US data for short term profit opportunity and dovish US data could help the pair test 1.1100 handle once again.
GBP/USD: The pair traded flat for most of the day, but there were signs of bearish influence as cautious investor sentiment ahead of the upcoming BOE meeting tomorrow keeps GBP bulls in check. Firm USD on account of fading optimism surrounding Sino-U.S. trade deal also kept GBP under pressure keeping price capped below 1.29 handle. Traders now await US data for short term profit opportunities.
USD/CAD: The pair is seeing price action trapped within a thin price range as both sides lacked the strength to induce a rally resulting in directionless price action. While USD was strong in the broad market, a slight pullback in US T.Yields kept USD bulls under pressure while fading trade deal optimism and weak crude oil price kept CAD bulls under pressure. Traders now await US & Canadian data for short term profit opportunity.
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