Dovish cues from US Wall Street and disappointing Chinese macro data caused equities to bleed, macro data from EU was positive but does little to change price action as investor sentiment shows bearish inclination.
Summary: Global market is seeing mixed price activity today influenced by macro data and cues from yesterday’s trading session. US Wall Street last night saw major indices and equities slide as construction spending data was way worse than expected. Further, the cheer with other major markets enjoyed on optimism surrounding Sino-U.S. trade talks failed to have any impact on Wall Street price rally as US investors have grown way of conflicting headlines hitting the streets time and again with no headlines containing any solid data on content trade talks between two nations. Further, disappointing macro data outcome from China and downgrading of growth target for the year ahead in China combined with dovish cues from Wall Street resulted in major Asian and European equities seeing sharp declines today. Meanwhile, forex market saw relatively positive performance as USD lost some ground in market following Wall Street performance last night. Positive investor sentiment and increased risk appetite influenced by optimism surrounding Sino-U.S. trade talks helped major global currencies capitalize on USD’s weakness and trade positive in global market today.
Precious Metals: Increased risk appetite over last two trading sessions has reduced demand for safe have assets in broad market significantly. Further profit booking activities also dragged the price to multi weeks low in recent past. However, Wall Street decline last night and dovish equity performance in Asian and European markets combined with weaker dollar helped precious metals find some peace. This led to both gold and silver trading flat near previous session lows across today’s trading session.
USD/JPY: The pair saw sharp fall during American session last night owing to disappointing US construction spending data and Wall Street decline. Disappointing Chinese macro data and declining Asian equities also added to Yen strength and kept it near overnight lows in early Asian market hours but better than expected EU macro data and healthy risk appetite in broad market helped the pair move back near previous session high where the pair has consolidated in European market hours.
AUD/USD: The pair is seeing two way price action today as bulls on both sides of currency pair have some level of fundamental support. While macro data in Australia was mixed the PMI’s were positive and RBA maintained neutral stance and comments mirrored last month’s sentiment. However, Dollar’s strength supported by US T.Yields and disappointing Chinese macro data added dovish influence to AUD resulting in pair falling from intra-day highs to lows and both sides waging war for control resulting in range bound price action.
On The Lookout: In American market hours today, macro data outcome and speech by Bank of England governor Mark Carney are the main events. But investors are also focused on price activity in US Treasury market as long term government bond yields dropped following Wall Street’s decline last night. This in turn weighed down US dollar in broad market helping forex market seeing positive price action today despite equities seeing sharp declines. In US market, the key release of the day as ISM Non-Manufacturing PMI, US Federal budget balance & New Home Sales data. Also in Pacific-Asian market hours speech from Bank of Japan’s board member Harada, Japanese house hold spending and Australian GDP data are expected to provide directional cues in Forex markets.
Trading Perspective: Given the fact that US Wall Street has proved itself resilient to headlines pertaining to Sino-U.S. trade talks, macro data outcome is likely to be key driving force behind price action in Wall Street tonight. Forex markets are likely to continue range bound action with positive bias ahead of US macro data updates while equities are likely to open positive as fundamentals remain in favor of market bulls.
US Indices: Ahead of US market opening, major index futures trading in international markets such as S&P500 and NASDAQ 100 futures were up nearly 0.15% and Dollar index which measures its strength against six major global currencies is trading positive. This suggests that markets bulls have strong fundamental support and US Wall Street is likely to see positive opening. Positive price action in major stocks will lead to US indices trading positive during today’s market hours.
EUR/USD: Bears seem to have a solid grip on common currency in global market as the pair failed to capitalize on better than expected macro data outcome and build a recovery rally. The pair continues to trade range bound ahead of US macro data update as USD remains strong in broad market despite suffering slight dovish influence earlier today on cues from Wall Street and US T.Yields going down from recent highs. A positive US macro data outcome will lead to pair taking a bearish nosedive.
USD/CAD: While US dollar suffered in global market, the pair continues to trade positive as CAD seems to lack fundamental support to establish positive rally despite crude oil trading with significant gains in spot and futures market as Friday’s disappointing GDP data from Canada seems to be still weighing on the loonie. Political tensions in Canada is also continuing to weigh down CAD meanwhile strong fundamentals for USD bulls adds strength to Greenback suggesting that regardless of macro data outcome the pair is expected to remain trading in green for rest of the day.