US Treasury Secretary, Steve Mnuchin, was considering easing trade tariffs on Chinese imports as the two economic superpowers continue trade negotiations. The signs of possible progress in negotiations over the Sino-US trade war boosted equities in Asia with the Shanghai Composite Index advanced 0.8 percent to 2,579.76, and Tokyo’s Nikkei 225 added 1.2 percent to 20,655.08. Australian stocks closing higher for a fourth straight day with the ASX 200 adding 30 points or 0.5% to 5879.6 points. Over the week, the top 200 index rose 1.8% while the broader All Ordinaries also rose 1.8%. U.S. crude oil rose 54 cents to $52.61 per barrel while Brent crude oil, adding 47 cents to $61.65 per barrel in London.
Equities in Europe are on bulls playground with DAX trading 0.94 higher at 110,020 Cac40 adding 0.97% to 4840 and FTSE in London gaining 0.45%.
On the Lookout: US-China trade talks headlines after The Wall Street Journal’s story, that the US administration is considering reduce tariffs on Chinese imports will set the tone today in the markets. The economic calendar includes UK retail sales where analysts expect to drop 0.8% m/m in December, following a 1.4% rebound seen in November. Total retail sales are seen arriving at 3.6% over the year, same as that booked previously. In the US, industrial production and consumer sentiment data will be released later today.
Trading Perspective: Forex markets still appear to be taking a positive view on all of the political turmoil coming out of the UK Brexit story as the sterling continues to edge higher against the US Dollar. Increasing talk around the prospect of an article 50 extension and a second vote appears to be encouraging some short covering in the pair. GBPUSD has continued to advance higher after this week’s dip to 1.2670; the sterling has managed to push through the 1.30 area after it broke above the 100-day moving average. Today GBPUSD is trading 0.25% lower at 1.2951 as the pair hit overbought conditions at the 1.30 area. The momentum has turned positive for the pair, and an attempt for the 200-day moving average at 1.3102 can’t be ruled out. Traders should wait for a convincing break above 1.30 to initiate new long positions. On the flipside 1.2930 is the immediate resistance while more demand will come at the 100-day moving average in the 1.2893 area.
GBP futures markets from CME Group noted open interest dropped by nearly 2K contracts on Thursday from Wednesday’s final 216, 613 contracts. Volume followed suit, shrinking by almost 16.2K contracts and clinching the second drop in a row.
The Aussie dollar has rallied its way back to 71.9 US cents after hitting lows around 71.5 US cents yesterday. The pair is trading around the crucial 100-day moving average facing resistance at 0.7236 weekly high and support at 0.7146 previous daily low.
EURUSD is trading in a narrow range as it tested yesterday with success the 50-day moving average at 1.1365 and rebounded just to get another rejection at 1.14. Investors are cautious at current levels as macro data are coming softly from the old continent. Other than Brexit, France economy is a source of risk after disappointing figures and the” yellow vest” movement. Italy is off the headlines for the week, but the budget and banking crisis in the country is far from over. Greece came up in the headlines again after political turmoil in Athens, and we should not forget that during the Grexit issue, the EURUSD hit multiyear lows at 1.06. As of writing the pair is trading 0.05% higher at 1.1396, with the first supply zone at the 100-hour moving average (1.1429) and immediate support at yesterdays low at 1.1365.
CME Group’s flash data for EUR futures markets showed traders added around 1.1K contracts to their open interest positions on Thursday vs. Wednesday’s final 525,546 contracts. In the same line, volume rose by more than 8.3K contracts following the previous sharp drop.