Investor sentiment divided on proceedings of Sino-U.S. trade negotiations resulting in mixed activity, Diamler warnings hurt European market.
Summary: Equities traded mixed on Asian market albeit prevalent positive bias as tensions surrounding trade talks between China and US continue to impact market bull’s momentum. All eyes continue to remain on headlines ahead of upcoming G20 summit in Japan as US President Donald Trump and Chinese President Xi Jinping are set to meet post December talks which raised hopes of possible trade deal between two nations. However, European equities are trading downwards exhibiting clear bearish bias as investor sentiment took a sharp blow over waning hopes surrounding possibility of trade deal between China and US and escalating tensions in Middle East. Further, profit warnings from auto gaint Daimler also caused additional wave of bearish influence to ride the market, resulting in major stocks and benchmark indices trading with dovish price activity. Meanwhile, forex pairs see positive activity as USD remains weak suffering influence from last week’s dovish fed comments.
Precious Metals: Silver trades with slight bearish bias on profit booking activity. On the other hand, escalating trade tensions, Middle Eastern crisis, Brexit woes and cheap USD have helped gold retain positive bias with yellow metal scaling new 6-yr highs. Dovish cues from central bank also add strength to Gold bulls.
Crude Oil: Crude oil price was higher earlier in the day in Asian market hours amid mixed market momentum, but cues from escalating Middle East tensions and dovish investor sentiment weighed on crude bulls resulting in price gaining bearish bias in late European market hours.
AUD/USD: The pair is trading positive in global market today as USD remains weak owing to lingering influence from dovish fed cues. However, gains in AUD were capped owing to tensions surrounding Sino-U.S. trading issues which hamper AUD bulls given strong trade ties between China and AU economies.
On The Lookout: Geo-Politics remains in the center stage as always. The biggest event in the week ahead is G20 summit but the same is unlikely to yield any major turning points in current headlines and geo-political scenarios are taken into account. However, there is always a chance for unexpected to occur keeping investors cautious and in their toes. UK PM contenders’ race is seeing the gap between top two candidates Jeremy hunt and Boris Johnson narrow down which suggests that either of them could win the race but by very thin margin. Meanwhile, Brexit uncertainties and increased odds for hard Brexit also hurt investor sentiment. Middle Eastern tensions are also rising given Trump’s actions towards Iran. Aside from geo-political cues, traders await macro data for short term profit opportunities.
Trading Perspective: US stock and benchmark index futures trading in the international market saw positive activity regardless of dovish investor sentiment ahead of Wall Street opening. While the odds of trade deal concluding in upcoming meeting is low, investors hope it will lead to another impasse similar to last December and this hope is supporting bulls driving price action of US assets in international market. This move is likely to continue in US market once trading session begins for the day.
EUR/USD: The pair is trading positive in global market driven by weak USD rather than strong EURO. A mixed German macro data outcome failed to have any visible impact on price rally. Traders now await US macro data for short term profit opportunities.
GBP/USD: The pair is trading in red despite USD’s weakness on Brexit woes and as race for UK PM position approaches its closing. But there weren’t any sharp declines as USD weakness capped downside move. Traders now await US macro data for short term profit opportunities.
USD/CAD: Despite dovish crude oil price, the commodity linked currency is trading with upper hand against US Greenback as USD remains weak on lingering influence from dovish fed cues. Traders now await US macro data update for short term trading cues.