Brexit flags

Equities Boom, Trade Deal Hopes Rise on Trump’s Comments, NFP Eyed Next

Brexit flagsGlobal market today saw positive price action on increased hopes for trade deal between US and China. Investors wait for US macro data for short term directional cues.

Summary: Global market is seeing another day of mixed activity in Asian and European markets today. However, the bias is favoring bulls as opposed to bias in favour of bears yesterday. While optimism surrounding Sino-U.S. trade talks had initially faded over lack of details on what was discussed in trade talks between delegates of both nations, Trump’s comments hinting that presidential summit to sign a trade deal will be held within four week boosted risk appetite in the market. Asian market saw all major markets aside from Hong Kong maintain positive price action across entire trading session. Positive cues from Asian markets helped investor sentiment improve in European markets influencing most major benchmark indices and stocks to open and trade in Green. However, lingering effects from Italy’s reduced growth forecast and Brexit woes continue to pressure market bulls keeping sharp upside move in check ahead of today’s US NFP data update. Strong USD in the global market influenced mixed action in Forex market.

Precious Metals: Post sharp declines during previous session which took to the price to multi month lows, both Gold and Silver saw sharp recovery rally earlier today. However strong USD capped gains preventing move above critical resistance levels, while increased risk appetite on Trump’s further affected price action of safe haven assets in the market causing precious metals to decline from intra-day highs and trade rangebound in European market hours.

Crude Oil: Crude oil price today rose to new 2019 highs with Brent crude futures seeing price per barrel scale $70 handle testing new 2019 highs. However, concerns of global economic slowdown owing to lack of progress in Brexit and Sino-U.S. trade talks caused the price to decline in Asian markets resulting in subdued price action with bearish bias in European market hours.

USD/JPY: The pair saw price action reach 3-week highs as optimism surrounding positive outcome in Sino-U.S. trade talks supported positive action of US Dollar. Further, expectations for trade deal to be signed by both nations in near future boosted risk appetite in the broad market giving strong fundamental support to USD bulls and weakening demand for Japanese Yen which is considered as safe haven asset in the broad market.

Sino-U.S. trade talkOn The Lookout: As trading session comes to close for the week geo-political events remain the main focus of investors across the globe. Optimism surrounding Sino-U.S. trade talk is recovering once again post comments from US President Donald Trump who commented that trade deal will be signed between two nations within four weeks time. While there haven’t been any clear details on what topics are being discussed between delegated on two nations, news hinting at timeline for trade deal is a welcome update. Meanwhile on European side, Brexit deadline is fast approaching with UK political climate still remaining in dire straits and lawmakers indecisive nature hampering progress in Brexit. While amendment has been passed to approve another request for deadline extension, PM May is yet to contact EU for Brexit extension request. In immediate future as trading session comes to close for the day investors focus is on US and Canadian macro data updates for short term directional bias and profit opportunities.

Trading Perspective: Risk on investor sentiment is likely to influence positive price action in US market hours. A positive outcome in US NFP data will strengthen US Dollar capping gains in Forex market.

US Indices: US benchmark index futures in the international market were trading positive ahead of Wall Street opening. The positive price action was influenced by optimism surrounding Sino-U.S. trade talks which greatly boosted investor risk appetite in the global market. Investors now await US NFP data and unemployment rate update for short term directional cues ahead of US market opening.

EUR/USD: The EURUSD pair continues to trade below mid 1.12 handle and remains trapped in a range bound price action in lower half of 1.12 price range despite better than expected macro data outcome from Germany as EURO is pressured by Brexit woes. But bulls remain supported by Sino-U.S. trade deal optimism. A dovish NFP will help the pair move the upper half of 1.12 handle while hawkish NFP will lead the range bound action continuing in favour of USD for rest of the day’s trading session.

USD/CAD: The pair saw steady upward price action across today’s Asian and European market hours. Softer Crude oil price and upbeat US T.Yields are some of the major factors that support US Dollar on its positive price action. However, optimism surrounding Sino-U.S. trade talks continue to underpin market bulls supporting CAD to some extent capping USD’s gains. Traders now await Canadian Employment change data, US NFP data and Unemployment rate update from Canada and US calendar for short term directional cues ad profit opportunities.