Global markets opened in red on cues from U.S. Wall Street but optimism surrounding trade deal boosted major indices and stocks while strong USD in broad market capped gains in Forex market.
Summary: Equity and Forex markets saw mixed activity in all major Asian and European countries. Dovish cues from U.S. Wall Street, increased tension over proceedings of geo-political events following weekend headlines and concerns of slowdown in economic activity in UK & European markets influenced caution among global investors and resulted in risk averse trading activity. While Asian markets saw dovish action at start of the day, optimism surrounding Sino-U.S. trade talks improved risk appetite as weekend headlines hinted at unexpected meeting between representatives of China & U.S.A. later this week before meeting between Presidents of both countries at end of the month. However declining long term government bond yields in Germany which lead to widening spread difference between other major global counterparts such as Italy & U.S. bonds and reduced growth forecast from central banks of E.U. & U.K. have created demand for safe haven assets which also limited fund flow to risk assets resulting in today’s mixed price action.
Precious Metals: Gold and Silver saw subdued price action in broad market today owing to strength of US Dollar in broad market. However risk averse investor sentiment owing to cues from US wall street and concerns of economic slowdown in Euro area continued to provide steady demand for safe haven assets keeping price action above critical support price levels.
AUD/USD: The pair rebound from Friday’s lows at start of session but began its downside price action by mid Asian market hours. Caution surrounding Sino-U.S. trade talks scheduled to occur later this week triggered downside move and US Dollar positive rally in broad market helped the pair make a bearish price breakout resulting in pair failing below critical price level of 0.7070 and establishing bearish price rally.
USD/JPY: The pair managed to hit new 2019 highs today influenced by strong US dollar in broad market which has managed to trade positive for sixth consecutive session in broad market today. Increased risk appetite in late Asian/early European market hours helped the pair see upward price action and hit a new yearly high at $110.45 handle post which it is trading well above $110.30 handle having managed to establish a strong hold above $110 handle earlier in the day.
On The Lookout: The main focus of investors is now towards Sino-U.S. trade talks scheduled to occur later today. Given the fact that key issue – intellectual property rights handling is to be addressed in the meeting, a positive outcome is likely to result in trade deal between two nations as both economies have suffered significantly owing to ongoing trade wars. On release front, today’s U.S. calendar is silent for the day. Price action is likely to be influenced by news driven momentum in Wall Street today.
Trading Perspective: As headlines dominated investor sentiment once again with key geo-political events coming into focus, market is likely to see mixed price action on divided investor sentiment.
EUR/USD: The pair is on steady downward price action since trading session opened for the day. Strong Dollar in broad market, declining 10-yr German government bond yields which lead to widening of spread difference and concerns of economic slowdown in Euro area business activities have created a scenario of bearish fundamental market which suggests declines are likely to continue for rest of the day.
GBP/USD: GBPUSD pair opened on dovish note and traded range bound with bearish bias. However, hopes for soft Brexit kept the pair stable above 1.2900 till early European market hours. Worse than expected readings in UK macro data resulted in pair falling below 1.29 handle post which strong USD in broad market has influenced steady downside price action.
USD/CAD: The pair continues to trade in range bound action locked well within Friday’s price range. However decline in crude oil price action has helped US Dollar regain upper hand by late European market hours. Strong USD and weak Crude oil price is a combination that always favors US Greenback resulting in pair aiming for last week’s highs during today’s American market hours.