Geo-political woes influence bearish price activity in global equity market, weak USD underpins market bulls in forex market. Powell’s speech eyed for clue on USD’s short to medium term directional bias.
Summary: Global market continues to see major risk assets decline as investor sentiment remains sour influenced by multiple factors such as Sino-U.S. trade war, Brexit, Middle Eastern crisis. Asian shares saw sharp declines as trade war woes continue to affect investor sentiment. Traders are anxious about how the face to face meeting between China and US presidents will turn out, this has inspired a wave of caution preventing investors from making any serious and major bets in risk assets. While European market is also seeing equities bleed in red, decline was limited owing to wave of bullish influence stemming from news that Capgemini has purchased its rival Altran for 3.6 Billion Euros. Forex market is seeing positive activity as USD remains weak owing to dovish fed cues.
Precious Metals: Demand for silver remains low but gold continues to see high level of cash flow and price continues to scale new 6-year highs on investor caution in the broad market. As traders are sceptic about outcome of sino-u.s. trade war, amid cheap USD investors are hoarding gold as much as possible.
Crude Oil: Tensions in Middle East which continue to escalate with each passing say seems to hint at possible supply disruption scenario which given current demand could turn out in crude bulls favor. As OPEC meeting approaches closed with expectations for extended supply cut and lack of fresh updates from Middle East or US, crude oil is trading positive today.
USD/JPY: The pair remains in downward price action as cautious investor sentiment in the market ahead of G-20 summit owing to Sino-U.S. trade war woes and fight between US and Iran. Further dovish fed cues weigh down USD and traders await Powell speech for signs of continued dovish stance which could result in pair sustaining current dovish activity.
On The Lookout: Fresh events comes into play in political playground as geo-political events remain the main driving force behind price action of high risk assets and major benchmark indices. While most central banks hint at dovish tone given possibilities of slowdown in economic growth the year ahead, RBA Governor Philip Lowe has questioned the effectiveness of policy easing measures which has eased investor concerns of another rate cut in near future while hinting that RBA could likely take on neutral, patient wait and see approach. There have been no fresh updates when it comes Sino-U.S. trade war and UK PM race is seeing no changes compared to yesterday while lead between two candidates continue to narrow down. Focus is now on G20 summit scheduled to occur later this week. Traders now await US new home sales data and Fed chair Powell speech for short term trading cues.
Trading Perspective: Dollar remains under pressure on dovish fed cues and declining bond yields. Unless Powell takes firm hawkish stance today it is likely to continue bearish activity in which case forex market will see major global currencies trade positive. Meanwhile, US stock and index futures trading in the international market were down ahead of Wall Street opening on Middle East crisis and cautious ahead of Powell’s comments later today which could provide further clarity to last week’s fed announcement.
EUR/USD: While risk aversion on geo-political cues took the wind out of risk assets, Euro has managed to scale new three month highs. This was due to USD weakness driven rally. But strong resistance slightly above 1.14 handle capped gains and investors now await Powell speech and US data for cues to push back up and scale resistance near mid-1.14 handle to aim for next leg of bullish price run.
GBP/USD: The pair spiked to new one month high earlier in the day on prevalent USD weakness and lack of fresh update over Brexit and PM race. But strong resistance above mid-1.27 handle capped bull’s momentum leading the pair to decline back below mid-1.27 handle. Traders now await good night sweet dreams, take care, stay safe and healthy for short term trading cues.
USD/CAD: The pair is seeing momentum in favor of CAD amid USD’s prevalent weakness. Focus is on G20 updates and crude oil price. Positive crude oil price in the market also added strength to CAD bulls. Investors now await Canada wholesale data and US new home sales data for short term profit opportunity and for Powell’s speech for clues on USD’s directional bias.