Volume Data

Risk Assets Trade at Record Levels amidst Holiday Thin Trading Activity

Summary: Post Christmas, Asian markets today opened on positive note and saw most of its major risk assets trade with a positive note. The risk on trading activity is influenced by optimism surrounding positive trade deal outcome in near future and hopes of upbeat economic activity and growth in the year ahead. Comments from Gao Feng, the spokesperson for Chinese commerce ministry stating that China is in close touch with USA over singing Phase 1 of trade deal and is currently making necessary procedures to prepare for signing the deal came as a positive trigger. However, the momentum from same mostly faded away given the fact that European markets are closed for the day on account of boxing day and second Christmas day celebrations. Further, the fact that Australian markets was also closed for the day on boxing day celebrations resulted in relatively low trading volume. In forex market, USD edged higher on trade deal optimism but t he same factor also underpinned broad based risk appetite resulting in most major global currencies trading on positive note causing major currency pairs to trade within familiar price levels.

Gao Feng

Precious Metals: Rare metals saw positive price action amid holiday thin trade as most of the investors still chose to safe guard their investment rather than take advantage of holiday season volatility. However, the spike in USD’s value caused higher exchange rate for international traders capping gains.

Crude Oil: Crude oil price traded positive in the international market as headlines suggested that China and US are working to close Phase 1 of trade deal at the earliest. This along with promised supply cut from Saudi and other OPEC members mean that there will be an increase in demand supported by upbeat economic activity when supply is scare making it bullish scenario for crude oil price.

AUD/USD: The pair is trading positive in the global market supported by optimism surrounding China-USA trade deal. While this provided AUD bulls some support given its stance as Chinese proxy, the gains were still limited owing to raise in USD’s value and holiday in Australian markets.

On The Lookout: Given the fact that year end season has come into effect in global financial markets and that there aren’t many major events to bring drastic shift in price dynamics unless trade deal is signed by China and USA before New Year Eve, speculative trading activity is all set to dominate global market. On release front, US economic calendar will see release of Initial Jobless Claims aside from which there isn’t any major data updates. Given the fact that weekend is also approaching fast, US market will see traders gear up to place short term bets which can be cleared by end of tomorrow’s session in the name of profit booking activity. However, the trading volume and liquidity will remain limited given the fact that Canadian market is also close today.

Trading Perspective: Optimism surrounding trade deal proceedings has brought about a fresh burst of bullish influence in the global market despite holiday thin trading volume and relatively low liquidity. This has helped Wall Street futures trading in the international markets see upbeat price action ahead of US market hours. Risk appetite in broad market also caused forex pairs to trade positive, this suggests that US Wall Street is set to see positive price action in both equities and forex assets regardless of limited liquidity or trading volume albeit scale of gains being limited by the mentioned handicap.

EUR/USD: The pair is trading positive on broad based positive investor sentiment and risk appetite. This helped the pair finally break past 1.11 handle and gain some stability given thin trading volumes and liquidity. However, USD’s spike capped Euro’s gains resulting in pair remaining trapped well below 1.1110 handle. Traders now await us data for short term profit opportunities.

GBP/USD: The pair similar to Euro also traded positive on broad based investor sentiment and risk appetite. Given the holiday season, while Brexit woes did add some pressure to GBP bulls, the impact was a little less when compared to normal weekly trading sessions. But pressure from firm USD also contributed some bearish pressure keeping gains in check. Traders now await us data for short term profit opportunities.

USD/CAD: The pair is trading with clear bearish bias today. The downside move comes from sharp gains in crude oil price which along with trade deal optimism provided the commodity linked currency Canadian Loonie with overwhelming bullish support. However, the news of progress in trade talks also underpinned USD resulting in CAD’s gains being capped just slightly above mid-1.31 handle. Traders now await US data for short term profit opportunities amid holiday thin trading activity.

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