Positive news from US-China trade talks during the weekend pushed Asian stocks higher. In Tokyo, Japan’s Nikkei 225 index finished 0.3% higher at 20,883 the Hong Kong’s Hang Seng index added 0.21% percent higher at 27,990. The Shanghai Composite edged 1.30 percent higher at 2,618 and Australian stocks finished at 5,891 with 0.5 percent higher. US dollar index is 0.08% higher at 95.68 while Gold pressure persists sending the precious metal down to 1311. The 10-year U.S. Treasury yield, trading at 2.695 percent after, gained six basis points on Friday just to pull away from a four-week low of 2.619%
European indices started lower with DAX losing 0.31 percent, CAC40 is down 0.44 percent at 4,996. In Madrid, IBEX35 gives up 0.70%, while stocks in London started flat.
On the Lookout: US President Donald Trump and China’s Xi Jinping will meet later in February amidst the recent improvement in the sentiment surrounding US-China trade negotiations. Brexit Secretary Stephen Barclay and senior government officials are due to discuss alternative arrangements to the Irish backstop this week. The economic calendar starts today with US factory orders and durable goods, on Tuesday traders will watch the RBA meeting and Australian trade and retail sales data.
Trading Perspective: The greenback started the week outperforming its major peers after Friday’s US jobs data, the Aussie dollar is down 0.26 percent against USD to 0.7231 while NZDUSD trading below 0.69.
EURUSD started 0.10 percent lower to 1.1448 in quiet trading after a euro rally the previous week which sent the pair to the 1.15 area. January was a good month for the common currency as the market has priced the FED rate hike pause, but it seems that missed the worst than expected economic figures from the eurozone. The GDP booked a nice 1.8% growth in 2018, but looking behind the numbers, the second semester was very slow registering only 1% growth with downwards revision from several institutions. Italy has now entered a technical recession with quarterly growth negative in the third and fourth quarter of 2018. Also, 2019 is an election year for many European countries and the Brexit outcome expected by March would weigh on the common currency.
The technical picture has deteriorated in the short term as the pair broke below the 50 and 100-hour moving average at 1.1451 and targeting the 200-hour MA at 1.14. On the upside, Friday’s high at 1.1489 is the first resistance while 1.1586 is a key supply zone which if breached will attract more traders. Open interest in EUR futures markets shrunk by nearly 2.5K contracts on Friday from Thursday’s final 529,890 contracts, according to preliminary figures from CME Group. Volume dropped for the first time after three consecutive builds, this time by almost 59.6K contracts.
GBPUSD is trading 0.21 percent lower at 1.3054 at the strong support 200-day MA; the pair has lost momentum after the pair rejected at 1.32 last week. Immediate support can be found at 1.30 round figure while the next support is 1.2905 the 100-day moving average. On the flipside, 1.3115 is the first resistance while a break above will drive the prices to 1.3150.
GBP futures markets from CME Group, investors added just 971 contracts to their open interest positions on Friday vs. Thursday’s final 197,655 contracts. Volume extended its downtrend, this time decreasing by 14.9K contracts.