Italian Debt

European Equities Move Two Ways on Italian Debt Woes, US Retail Sales Awaited

Italian DebtRisk appetite recovered in the market today on easing tensions between China and U.S. but Italian debt woes capped gains in European market influencing dovish price action.

Summary: Global market today started off on a positive note following comments from US President Donald Trump who downplayed escalating tensions as nothing more than a little squabble. With both parties re-affirming their stance on continuing trade talks with aim to close a trade deal, investor’s fears that China would impose retaliatory tariffs on US goods eased paving way to positive price action in Asian markets. However, some level of caution remained in the market, as Singapore equity market one of the major hubs for global trade saw benchmark indices and major equities close in red. European equities continued with their rebound activity from previous session as hopes for positive resolution in ongoing Sino-U.S. trade wars improved risk appetite in the market. However, fresh Italian debt woes brought in a wave of caution in European market resulting in recovery rally losing steam. This has resulted in European benchmark indices paring early gains and trading in red as European session approaches the day’s close. Forex market continues to see sell-off of major global currencies resulting top forex pairs seeing dovish price action.

Precious Metals: Both gold and silver see positive price action in the global market today. While tensions surrounding Sino-U.S. trade talks have eased a bit, investors chose to retain caution. Further, fresh Italian debt woes from Europe amid renewed risk appetite also boosted safe haven demand resulting in both gold and silver trading with slight positive bias.

Crude Oil: Crude oil is trading with slight bearish bias in the global market today owing to dovish influence stemming from high build in US API weekly crude oil inventory data. However, positive influence stemming from OPEC enforced supply reduction and US decision to stop waivers for Iranian crude oil import provides support to bulls keeping crude oil mostly range bound in today’s trading session.

AUD/USD: While Australian Dollar initially gained some positive influence on easing tensions surrounding Sino-U.S. trade war, it lose all bullish strength owing to disappointing Australian Wage price index data and Chinese industrial production data. Further, strong USD in the broad market put pressure on AUD resulting in the pair seeing steady bearish price action today.

Sino-U.S. trade warsOn The Lookout: Geo-political issues remain the main driving force behind price rally in global equity market. Tension surrounding Sino-U.S. trade war woes have eased off a bit but caution remains as traders await further headlines on schedule for trade talks between two nations. Traders also remain wary to safe guard their investment against possible move from China on imposing retaliatory tariffs on US Goods or selling off US bonds in large quantity as negotiation tactics to force U.S.A. which could trigger another wave of sharp sell-off. On Brexit front, UK parliament is preparing to have another vote on PM May’s withdrawal agreement. In the meantime, traders focus on macro data updates for short term profit opportunities.

Trading Perspective: Strong USD is likely to pressure major global currencies using prevalent cautious investor tone in the market. But positive cues in US market hours may help ease dovish pressure from USD resulting in range bound price action with slight positive bias in Forex markets. US Wall Street is likely to see subdued price action with slight positive bias amid ongoing trade war related caution.

US Market: Traders await US retail sales data for short term directional cues. Ahead of Wall Street opening US index futures trading in international market saw dovish activity on disappointing macro data outcome from China and dovish cues from European markets suggesting US market is likely to see subdued opening today.

EUR/USD: The pair fell below 1.12 handle and continues to decline steadily. Macro data outcome was in line with expectations and hence there was no impact on Euro bulls. Pressure from USD bulls on cautions investor tone which underpins US Greenback adds to Euro’s decline. Traders now wait for US retail sales data for short term directional cues.

USD/CAD: US Greenback today regained control over price action of the pair as Crude oil price fell in the broad market. Further, strong USD in global forex market on cautious trading activity also adds pressure to CAD. Traders now await US retail sales data, Canadian core CPI data for short term directional trading cues.