Precious Metals

Equities Spike While Precious Metals Bleed On Healthy Risk Appetite

Precious MetalsSino-U.S. trade optimism has influenced a fresh wave of bullish price action in global market resulting in positive activity in stock markets while strong USD limits gains in Forex markets.

Summary: The month of March has opened with a positive tone for global finance market. Headlines hinting at talks between two nations proceeding in favorable direction and delay in tariff deadline has raised hopes in market for positive outcome in trade talks between China and U.S.A. This has caused both forex and equity markets to see positive price action for a second consecutive session today. Headlines from the weekend hints that progress has been made even in key issues such as better protection against intellectual property theft and requested China to remove tariff on U.S. agricultural products and food items such as beef, pork etc., Hopes for positive outcome has led to high level of gains in risk assets today with increase in fund flow and trading volume for most major risk assets across both Asian and European markets. Market today also saw safe haven assets suffer sharp loss as increased risk appetite led to investors booking profits in high volumes and redirecting it towards riskier equities and forex assets painting majority of the market in green.

Precious Metals: Despite USD suffering some downside move owing to US President Donald Trump’s comments, increased risk appetite put a dent in price action in precious metals market. This resulted in both Silver and gold suffering further declines as investors booked profits to redirect funds to risk assets instead of placing more bets on precious metals when the price is low. This resulted in price of precious metals falling to multi-week lows.

AUD/USD: The pair opened with a gap up move as US Dollar suffered initially owing to President Trump’s comments and optimism surrounding Sino-U.S. trade talks. But as US Greenback managed to retain some level of support from spike in US T.Yields, the price action soon turned range bound. Investors are cautious ahead of tomorrow’s RBA update resulting Australian dollar bulls lacking strength to sustain a positive price rally and build on today’s gap up opening move.

USD/JPY: Following sharp upside move on Friday inspired by optimism surrounding Sino-U.S. trade talks, US President Trump’s comments from weekend the pair opened with a gap down move, but erased all loss on strength and fundamental support received from upbeat US T.Yields resulting in the pair seeing consolidative price action near Friday’s highs.

On The Lookout: The main focus of investors is on proceedings of Sino-U.S. trade talks as headlines from weekend suggests that after addressing key issues between China & U.S.A. President Trump has put forth his own terms that would benefit U.S.A and is being considered by Chinese side currently.According to a report by Wall Street Journal if talks continue to progress positively from this point forward then US & China will sign a formal trade deal during a meeting scheduled to occur on March 27, 2019. On the other hand despite investors expecting for no-deal brexit to be avoided currently progress on same is at a standstill. In Immediate future, investor focus is tomorrow’s Australian Central Bank interest rate decision update, Speech by Bank of England Governor Mark Carney and Flash PMI updates from E.U. and U.S.A. as these updates are expected to keep major global markets highly active in the next 36 hours.

Trading Perspective: Given high amount of risk appetite and cues stemming from international markets, it is safe to conclude that US Wall Street is gearing up for another trading session of highly positive action across all major risk assets in forex and equity markets.

EUR/USD: The EURUSD pair opened with a gap up move today morning on subdued USD, but as USD rebound in broad market in late Asian and early European market hours supported by strength from upbeat U.S. T.Yields, a lack of fundamental support for EURO bulls resulted in the pair seeing declines. But high risk appetite in market ahead of tomorrow’s flash PMI updates kept the pair safe above 1.1300 handle where it is expected to continue moving range bound for rest of the day’s trading session.

GBP/USD: The pair opened with a gap up move supported by hopes for delay in Brexit headlines. However, no headlines hit market today, meanwhile disappointing UK marco data caused GBP to lose its edge which combined with US T.Yields backed rebound by USD resulted in pair moving back near Friday’s lows where it is expected to trade range bound for rest of the day. In case T.Yields spikes further higher in American market hours the pair could see further sharp declines.

USD/CAD: The pair saw consolidative price action today as USD grew strong over late Asian and early European market hours while CAD also remained supported by positive crude oil price action and optimism surrounding Sino-U.S. trade talks. The day ahead will see continued range bound action unless either side manages to make a clear breakout which seems unlikely given silent macro calendar schedule on both sides of currency pair.