Easing Huawei restrictions boosted EU tech shares resulting in EU indices trading positive while traders await further headlines and macro data updates for short term profit opportunities.
Summary: Escalating trade war woes lead to sharp losses for both China and U.S. markets. Further, backlash from blacklisting Huawei was unexpectedly high for US which caused them to finally ease the noose around Huawei in a bid to push things through with China. As tensions surrounding trade war eased in the market, risk appetite boomed in the market causing Asian and European benchmark indices and equities to gain positive momentum. While major markets recovered losses incurred in the recent past, gains were limited as tensions surrounding trade talks still remain active in the market. Further tech sector share gains in European market also added strength to positive momentum in the market. Forex market also saw major currency pairs recover, but momentum is still mixed as market lacks a solid trigger to push market on bull’s path.
Precious Metals: Both gold and silver are trading in red today as market saw risk appetite return in investor’s trading activities. Further, US Greenback in which the precious metals are denominated in also remained strong in the global market despite major forex pairs recovering momentum. Costly dollar and healthy risk appetite are two factors highly dovish for precious metals hence resulting in dovish activity.
Crude Oil: Tensions from Middle East continue to underpin crude oil price action. Easing Sino-U.S. trade war woes also added strength to crude oil bulls. But crude oil price remains range bound with slight bearish bias in the market ahead of release of US API weekly crude oil stockpile data in late US market hours.
USD/JPY: The Japanese Yen lost its luster as trade tensions eased today resulting in USD gaining upper hand. US Dollar has already gained strength owing to recent sell off in the forex market. With Japanese Yen weakening USD saw sharp upside move but gains were capped owing to softer US T.Yields.
On The Lookout: All focus remains on trade war proceedings. It has now become clear that US would stop at nothing to stop China’s growth as technological superpower as long as US President Trump is holding the power. China has also refused to yield to unreasonable demand from US which suggests global economy is going to suffer in this prolonged trade war regardless of loss to either side. In the mean time, traders await macro data updates and high impact headlines for short term profit opportunities. In American market hours today, traders await US existing home sales data, US API weekly crude oil stockpile update, speech by FOMC member Rosengren and Japan’s trade balance update for short term profit opportunities.
Trading Perspective: As risk appetite has returned to market in response to easing grip on Huawei issue, global market has gained positive momentum which is likely to reflect in US Wall Street while Forex market is likely to trade range bound.
US Market: US benchmark index futures trading in the international market saw positive price action as US government ease restrictions on China’s Huawei Technologies Ltd to ease escalating tension between two super powers. While this is expected to influence positive activity in market today, the reprieve is temporary as easing restrictions have been limited until just Aug 19. Traders await macro data update for short term profit opportunities.
EUR/USD: The pair is trading in red despite recovery in the investor sentiment across global market. This pressure on EURO stems from strong USD which has managed to hold fort despite recovering risk appetite but the pair is unable to breach 1.1140 handle. Traders now await US macro data updates for short term trading opportunities.
USD/CAD: The pair is seeing two way price action today with sharp fall early in the day on account of positive crude oil price. But decline in price in European session combined with USD’s strength in the broad market caused pair to recover early declines and stage positive price action. Traders now await US API weekly crude oil stockpile data for short term directional bias.