ECB Draghi successor nomination update boosts market bulls, but growth woes cap gains. US macro data in focus as trading session is set to close early in Wall Street on account of Independence Day celebrations.
Summary: Asian market today saw equities and benchmark indices continue to decline as growth woes continue to plague global investor sentiment. While US has eased ban on Huawei to some extent which is surprising enough, it failed to have any lasting impact as headlines lack any sort of proof that US and China would sign a trade deal anytime soon. However, European indices today saw positive activity as France’s Christine Lagarde was nominated to succeed Mario Draghi as head of European Central Bank. And given her stance which is expected to be similar to Draghi’s, dovish policy scenario would continue if European parliament approved Lagarde and this has caused market bulls to gain positive fundamental support and establish positive price action today. Forex market is seeing mixed price activity as USD remains weak on low US Yields supporting bulls, but risk aversion influenced by global growth woes prevent risk assets from seeing positive price action.
Precious Metals: Precious metals are trading flat with slight positive bias today. While global growth woes in Asian market hours favoured demand for safe haven assets, ECB Draghi successor nomination caused positive investor sentiment in market preventing precious metals from seeing any sharp upward price action.
Crude Oil: Crude oil price is seeing positive activity in both major international benchmarks WTI and Brent following US API weekly crude oil stockpile data which saw draw in inventory for third consecutive week. Further, positive influence from middle eastern tensions and OPEC enforced extended supply cut agreement helped crude bulls maintain positive price activity.
AUD/USD: While the pair traded dovish in Asian market hours on dovish cues from China despite better than expected AU macro data, positive investor sentiment in European market hours, Weak USD acted as supporting factors helping the pair gain positive momentum. The pair has since moved well above 0.70 handle and is on path to scale weekly highs hit earlier this week despite lacking firm directional bias.
On The Lookout: Geo-political issues remain as the main focus of investors across the globe. Post update on weekend hinting that trade talks between US and China are back on track, no further follow up updates have been released. This has caused investors to consider that nothing has really changed resulting in traders taking up cautious stance leading to dovish price action in the global market. Brexit uncertainties continue to rise as traders are unsure if either of two candidates currently aiming to succeed UK PM Theresa May would be capable of delivering what May failed to do – a deal between UK and EU. This has caused tensions to escalate as race for succession approaches closing. Investors have started moving back to bonds and safe haven assets which is further increasing fears of recession in global economy leading to dovish price action in a cyclical manner. Traders now await US macro data for short term profit opportunities.
Trading Perspective: US Wall Street is likely to positive price action as stock and index futures trading in international market saw positive activity ahead of Wall Street opening on declining US bond Yields. However, market is set to close early today on account of celebration of US Independence Day celebrations. Weak USD in the global market could also help market bulls ensure positive price action in Wall Street today. Meanwhile, traders await US ISM Non-Manufacturing PMI, trade balance, factory orders and crude oil inventory data and Canadian Trade balance data for short term profit opportunities. As US market closes early today volume and trading activity in US market hours is likely to be low today.
EUR/USD: The EURUSD pair is trading positive in the global market today but price remains below 1.1300 handle. However, bids are in favor of continued EUR positive price action in short term supported by positive EU macro data and Weak USD on account of declining US T.Yields. Traders now await US macro data for short term profit opportunities.
GBP/USD: The GBPUSD pair which has already been suffering from dovish price action on account of political uncertainties in UK and Brexit woes declined further today as UK macro data sees disappointing outcome for third consecutive session this week. However, declines to the downside were limited to some extent owing to weak USD in the global market. Traders now await US macro data for short term profit opportunities.
USD/CAD: The USDCAD pair has been trading with dovish bias since trading session began for the day. While initial dovish trigger was influenced by weak USD on account of declining US T.Yields, positive crude oil price in the global market underpinned Canadian Loonie helping the pair decline below 1.3100 and 1.3070 handle aiming to hit 2019 lows. Traders now await US and Canadian macro data for short term directional cues and profit opportunities.
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