The outcome of Sino-U.S. trade talks was awaited for a clue on short term directional bias of the global financial market.
Summary: Global equity markets are seeing positive progress today as the trading session comes to close for the week. On last trading session for the week, there are several positive factors driving positive price action in the global market.
In the Asian market, equities trade positive as trade talks headed for the last day with representatives of both nations hinting at better than expected progress in trade talks. This along with reports stating that US President Donald Trump is set to meet with top Chinese negotiator – Mr. Liu He helped improve investor morale. Traders now hope for a possible partial trade deal between both nations and a partial deal will provide the global markets with some level of calmness given the fact that the global financial market is going through a whirlwind of news and event-driven price volatility.
In European market hours, major indices and equities opened bullish on positive cues from Asian and US markets. Further, news of comments from Irish Prime Minister Leo Varadkar stating that Brexit deal is likely to be clinched by end of October after the recent last-minute crunch talks saw some favorable developments helped improve optimism surrounding Brexit. This along with gains in the European stock market influenced by a boost in SAP shares on the update of the firm’s decade long CEO stepping down helped equity markets and risk assets see healthy risk on trading activity. In the forex market, the latest developments in geo-political events have resulted in major global currencies and EM currencies see positive momentum against US Greenback.
Precious Metals: Rare metals continue to trade positive on the last trading session of the week despite positive progress in trade talks and Brexit as investors await official concrete evidence and updates on positive proceedings. This along with weaker USD helped safe-haven metals trade positive in the international market.
Crude Oil: Crude oil price is trading positive in the global market as reports of a missile strike on state-owned Iranian oil tanker and data hinting at crude oil shipping price hike helped improve demand to supply ratio in favor of crude oil bulls. US tariffs on oil tankers have crippled nearly 3% of global oil tanker fleet and this is causing a dent in global oil supply helping push price up.
AUD/USD: The pair challenged a key resistance level today and is trading with positive price bias as optimism surrounding Sino-U.S. trade talks helped improve the support for Chinese proxy Australian Dollar. Further, the weakness of US Greenback on improved risk appetite in the global market also helped improve investor sentiment in favor of AUD pushing the pair to fresh two week tops.
On The Lookout: Attention of global investors are divided equally on Sino-U.S. trade talks and Brexit as both events show considerably positive progress just as the trading session comes to close for the week. US President Trump commented that progress in ongoing trade talk has been very very good and this has influenced a hope for a partial trade deal in the global market. But traders are still cautious about the outcome as President Trump has mentioned earlier in his comments that he is not ready for a partial trade deal.
So far none of the key problems such as copyright infringement and national security issues have been addressed by the USA which makes traders highly nervous about the possible outcomes of trade talks. Later in the day, US President Donald Trump is set to meet with Chinese Vice Premier Liu He which is the main focus of traders today.
In the European market, Brexit proceedings took an unexpected turn and optimism for Brexit deal rose to new highs as Irish PM stated that a deal is highly likely following his recent talks with British PM Boris Johnson. Now traders and general public alike wait to know more details on their discussion and reaction from EU and opposing party members on the latest progress.
In the Middle East, tensions rise to new highs following the latest attack on Iranian state-owned oil tankers given the high level of sanctions the US has imposed on Iranian central bank and oil exports. In the release front, traders await US Michigan consumer sentiment, expectations, and Inflation expectations data, and Canadian Unemployment data and employment change for short term profit opportunities. There is also a speech from FOMC members Kashkari and Rosengren.
Trading Perspective: Improved investor sentiment on the latest progress in trade talks and Brexit along with weaker USD suggests that the forex market is likely to see major and EM currencies continue to trade positive on the last trading session of the week. US stock and index futures trading in the international market saw positive price action ahead of Wall Street opening on broad-based optimistic geopolitical event outlooks which hint at a positive opening on Wall Street later today.
EUR/USD: The pair is trading positive in the global market today given development in major geopolitical events and resulting risk on trading activity. The price of the pair has headed towards mid-1.10 handle near which price is seeing range bound activity. Traders now await US macro data and FOMC members’ speech for short term profit opportunity and trade talk updates for short term directional bias as the trading session comes to close for the week.
GBP/USD: The pair is seeing positive price action as back to back positive headlines on Brexit related proceedings underpin GBP bulls. Both Irish and UK PM talks and Barnier –Barclay meeting boosted traders’ morale and optimism surrounding Brexit deal pushing the price of pair to mid-1.26 handle. Traders now await US macro data and FOMC members’ speech for short term profit opportunity and trade talk updates for short term directional bias as the trading session comes to close for the week.
USD/CAD: The pair is trading well nearly weekly lows below 1.3300 handle as the price momentum is underpinned by USD’s broad market weakness and firmer CAD. The commodity-linked currency Canadian Loonie receives strong support from upbeat crude oil prices and reports of progress in Sino-U.S. trade talks. Traders now await the Canadian unemployment rate and employment change data updates for short term profit opportunities. Positive employment change data would help CAD push the price below mid-1.32 handle as the trading session comes to close for the week. Traders also await trade talk updates as an outcome of talks will help decide the short term directional bias.
Please feel free to share your thoughts with us in the comments below.