Renewed Risk Appetite Paints Global Market in Green, US Dollar Remains Strong

forexAs all major geo-political events scheduled for the week have come to pass, retail traders have decided to book profits on macro data influenced short term price action causing risk appetite to boom in market painting market in green.

Summary: Global equity and forex market today saw positive price action inspired by renewed risk appetite in market. Following three consecutive sessions of corrective price action and now that all major geo-political events for the week are over, risk appetite bloomed in market. Majority of positive price action in today’s market was influenced by retail traders who wanted to book profits on short term trades given the fact that US and European market hours were set to see eventful day owing to economic calendar schedule. Both sides of Atlantic are set to see release of Manufacturing PMI’s which are expected to keep price action in forex market highly active. Meanwhile, positive manufacturing data release from China influenced a fresh wave of positive price rally in Chinese equity market which carried forward to all major equities and indices in European markets. Positive economic calendar updates from France and Germany also added to positive investor sentiment influencing bullish price action in European equity markets.

Precious metals: Precious metal saw dovish price action in the global market today as US Dollar rebound in broad market following upbeat US GDP update and spike in US Treasury Yields. However, an increased demand from emerging markets over sharp fall in price and increased demand for precious metals in India owing to expectations for a boost in retail activity in near future helped sustain price of gold and silver above psychological support price levels.

USD/JPY: Following upbeat US GDP data, US dollar rebounded in broad market and continued to gain momentum in Asian and European market owing to increased risk appetite in broad market. Further, spike in US Treasury bond yields added fundamental support to USD bulls positive price action in broad market resulting in the pair hitting new 10-week highs.

AUD/USD: Despite staying near multi week lows, the Australian Dollar posted decent gains against American dollaras trading session comes to an end for the week managing to reclaim the 0.7100 handle. AUD picked up momentum as the Chinese Caixin manufacturing PMI release today beat estimates and bulls found additional support following positive outcome in Australia’s economic data released resulting in positive price action ahead of US market hours.

donald-trumpOn The Lookout: As trading session comes to close for the week and month of February ended a disappointment following headlines inspired hype major geo-political issues remain unresolved and market condition remains in dovish territory overall. The main focus of investors is on Sino-U.S. trade talks as US President Donald Trump spouts contrasting comments in regards to trade talks between two nations. Following fallout in talks between U.S. & North Korea, President Trump has stated that if deal isn’t good enough he is ready to walk away from trade talks with China despite commenting that talks have made significant progress and is heading in positive direction just earlier this week. However, there are no major geo-political events scheduled to occur today which leads all the focus of investors to macro data updates. American market hours today will see the release of Core PCE price index, PCE deflator data, ISM Manufacturing PMI update and Michigan consumer sentiment/expectations data.

Trading Perspective: Dollar remains strong in broad market supported by spike in long term US government bond yields while risk appetite remains high which suggests that equity markets are likely to see positive price action while forex market will see range bound price action but directional bias in favor of major global currencies is on table depending on US macro data outcome.

EUR/USD:  The pair saw sharp two-way price move today with Euro declining sharp on strong dollar during Asian market hours but rebounding back above 1.14 handle on positive Euro area macro data. However, USD still remains strong and dragged the pair back below 1.1400 mark where the pair is range bound while investors wait for USD macro data release for short term directional cues.

GBP/USD: The pair continued to decline for second consecutive trading session today as brexit progress is currently in unfavorable direction while US greenback is supported by spike in US long term government bond yield. Investors now await US macro data update for directional cues as trading session comes to close for the week. A disappointing data release will result in range bound action near current price level while positive outcome in US data will lead to further declines.

USD/CAD: The pair caught fresh bids during the early North-American session yesterday following an unexpectedly strong US GDP data and spike in US long term government bond yields. However rebound in crude oil price today limited USD’s gain resulting in range bound action while investors await Canadian GDP and US ISM manufacturing PMI updates for directional cues as trading session comes to close for the week.