Global Markets Trade Positive As Sino-U.S. Optimism Boosts Risk

Karthik Subramanian

Karthik Subramanian has been a professional trader and fund manager over the last 18 years. He is basically a software developer who made the transition to financial domain around 18 years back as the attractiveness of the financial markets proved too much for him. He lives in Chennai in India along with his wife and son. He began his career as a software developer in 1999 and then gradually moved into the financial industry as he began trading stocks in his pastime. He then moved into the financial markets full time and then shifted his focus to the FX markets due to the liquid nature of these markets. Since then, he has been trading FX diligently and his favourite pair are the EURUSD and EURJPY. Over the last couple of years, he has found blockchain to be of high interest and considering his background in software and finance, he has since assembled a team of highly talented developers who have since worked on a variety of projects like crypto exchanges and blockchain architecturing. Now, he balances his time between trading and commenting on both the FX and crypto markets. He has worked with many publications including FX Street and Finance Magnates, which has helped him gain experience and also recognition across the industry. He loves to write and this passion has helped him to reach out across the FX and crypto industry. Right now, he works on his pet projects in the FX and crypto industry and spends his time writing and managing his blockchain team and helping it to reach higher.

UK parliament

Global Markets Trade Positive As Sino-U.S. Optimism Boosts Risk Appetite

February 14, 2019

UK parliament Global MarketsHeadlines driven momentum ahead of geo-political events resulted in positive price action in both equity and forex markets.

Summary: Equities trade positive for second consecutive session as optimism surrounding Sino-U.S. trade talks continue to inspire positive price action. Risk appetite in market got additional boosts as news hit market that U.S. President Donald Trump is ready to ease his stance on March 1st 2019 deadline owing to increased possibility of trade deal between two nations. Cues from U.S. Wall Street has been dictating investor sentiment for quite some time now and Sino-U.S. trade war played a major role in decline of equities over the past few months. A positive trade deal between the two nations is likely to erase majority of dovish influence on global market and put equities back in path of bulls to resume 2017’s growth rally. Political issues in European markets also seem to be reaching a climax which makes ongoing trading session a pivotal point for long term outlook. Subdued US Dollar in broad market has helped Forex market take advantage of prevalent risk appetite in global market resulting in major pairs trading positive today.

Precious Metals: Given the fact that UK’s parliament session to address Brexit proceedings and key talks between China & U.S. regarding intellectual property rights issues are expected to begin tomorrow some investors have decided to exercise caution despite prevalent risk on trading activity. This combined with weak USD in broad market has helped the price remain above critical support levels.

USD/JPY: The pair traded range bound in early Asian market hours, but increased risk appetite helped the pair stage a solid recovery rally reaching fresh 2019 highs at 110.84.Optimism surrounding Sino-U.S. trade talks continue to underpin USD bulls suggesting that positive price action is likely to continue for rest of the day. Softer Japanese Producer Price Index (PPI) further dented the already weaker sentiment surrounding JPY which added further positive influence to pair’s price action..

AUD/USD: The currency pair had a strong day yesterday charting significant upside move, this was further boosted by weak USD in broad market resulting in pair breaching 0.7100 handle. Optimism surrounding Sino-U.S. trade talks further boosted Australian dollar resulting in pair hitting intra-day high of 0.7135 but strong resistance near 0.7140 handle capped further gains resulting in pair declining from intra-day highs but trading well above 0.7100 handle.

US TRUMPOn the Lookout: The main focus of investors is now on China & U.S. trade talks set to begin tomorrow. This meeting is expected to happen in China and the outcome will likely decide if there is going to be trade deal between two nations. Aside from trade talks, investors focus is on tomorrow’s UK parliament meeting but nothing major is now expected out of same as UK PM Theresa May has asked for more time and major decisions have been postponed to meeting on Feb 27, 2019. Tomorrow’s meeting is likely to be first time when PM May receives strong positive support for her action regarding Brexit in quite a while now. On release front, US market will see release of Crude oil inventory data, CPI update and a speech by FOMC member Harker later in the day. Positive investor sentiment in broad market and hawkish cues from Asian and European markets are likely to support positive action in U.S. Wall Street today.

Trading Perspective: Given prevalent risk appetite and positive investor sentiment in broad market, U.S. Market is likely to see all its major high risk assets trade in green.

U.S Indices: Major U.S. Index futures trading in international market such as S&P 500 and NASDAQ 100 trading in international markets were up by 0.50% ahead of U.S. market opening. Optimism surrounding Sino-U.S. trade war and headlines surrounding border wall deal continue to underpin market bulls which combined with positive cues from international market are likely to inspire positive price action during today’s market hours.

EUR/USD: Despite trading positive earlier in the day, the pair erased all its early gains and saw sharp losses as Spain’s parliament rejected the government’s 2019 draft budget earlier today, pushing the country to the brink of a national election. This caused the pair to lose hold above 1.33 handle and fall all the way to mid-1.28 handle leaving price action back into bears territory. Moving forward, the pair is likely to continue further decline as EURO lacks trigger to make another bullish breakout.

USD/CAD: A strong rebound witnessed in crude oil prices  earlier in the day and broad based USD weakness dragged the pair to one week lows, however renewed USD buying interest helped reverse an early dip to sub-1.3200 level as investors focus turns to US CPI update. Given strong crude oil price which continued to underpin loonie, the pair is likely to move range bound for rest of the day.

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