Divided investor sentiment continues to limit positive price action in broad market on most major assets. But hopes on positive outcome in future talks following comments from representatives of China & U.S. has inspired a temporary phase of positive activity in broad market.
Summary: Global markets saw divided outcome in major economies today driven by headlines and macro data driven momentum. Forex market saw range bound action today as US Dollar weakened in global market following yesterday’s disappointing macro data while major currencies lacked positive influence on divided investor sentiment ahead of Sino-U.S. trade talk update. Cautious investor sentiment lead to two of three major US indices closing in red last night and dovish cues from US Wall Street influenced dovish price action in Asian equity markets. However European markets saw all its major indices and stocks open and trade positive today as news hit market that trade talks had concluded with no further details released on same. However tweet from U.S. Treasury Secretary Steven Mnuchin stating that the meeting was productive and comments from White House press secretary stating talks will continue in Washington next week inspired fresh wave of optimism underpinning positive market price action.
Precious metals: Gold today hit two week high having broken past upper limits which capped gains over last 7 trading sessions as investor tension remained high in broad market ahead of Sino-U.S. trade talks. Silver also traded positive well above critical price levels. Given the fact that no solid details were released on trade talks between China & U.S. which ended today, investor sentiment remains divided painting positive picture for short to medium term outlook of precious metals.
USD/JPY: The pair extended overnight declines early in the day on safe haven demand ahead of Sino-U.S. trade talk update and dovish performance of major indices in US Wall Street. However news of talks concluding between two nations and further talks set to continue next week in Washington has helped USD rebound from intra-day lows. The outcome of US macro data updates later in the day will provide short term profit opportunities as trading session comes to close for the week.
AUD/USD: The pair saw downtrend price action in Asian market hours owing to softer Chinese inflation data but the rally was short lived and Australian dollar gained momentum as news of Sino-U.S. trade talks concluding hit market and mention of further talk scheduled to occur next week boosted optimism for deal in market underpinning Chinese proxy- Australian dollar. This caused the pair to move back above 0.7100 handle and the pair is expected to close on positive note for the week.
On The Lookout: As trading session approaches week’s closing, all major events and high impact macro data updates have already hit the market. Two most anticipated events of the week ended in stalemate and investors now look forward to proceedings of events scheduled to occur later in the month. But given current status of both events, the outcomes look in unfavorable direction and could lead global market into another great phase of decline if resolution is not found by March deadline. For the day ahead, U.S. Calendar is set to see second tier macro data updates which are expected to provide short term profit opportunities as trading session closes for the week. However they are unlikely to have any major impact as proceedings of geo-political events dictate price momentum for now.
Trading Perspective: Range bound price action with bullish bias is expected to be visible in Forex market, while US market is likely to see major equities and indices trade positive on Sino-U.S. trade talk optimism.
US Indices: Following updates of Sino-U.S. trade talks conclusion and further talks scheduled to occur in Washington from update from White house spokesperson, US index futures trading in international market saw positive price action. This suggests that three major US indices and top equity stocks are likely to open and trade positive across the day on Sino-U.S. trade optimism.
EUR/USD: The pair rebound from intra-day lows on Sino-U.S. trade deal related optimism. However common currency still suffers dovish influence as slowdown in the euro bloc keeps weighing down EURO bulls in broad market. The pair is likely to trade range bound with positive bias for rest of the day but political issues such as Spain’s snap elections in April, unresolved French yellow vest protest etc., are likely to weigh down EURO in long term.
USD/CAD: The pair is range bound as optimism surrounding Sino-U.S. trade talks underpin USD while CAD bulls are supported by upbeat crude oil price which has resulted in positive and negative influence balancing out each other. Given dovish forecast for macro data updates on both sides of the pair a breakout is unlikely during rest of today’s trading session suggesting range bound action is likely to continue across rest of today’s trading session.