Trump’s comments on trade deal boost risk appetite, Prelim US GDP data, US pending home sales & EIA crude oil stockpile data in focus.
Summary: Global equities are seeing positive price action in major risk assets as trade deal hopes underpin broad-based risk appetite. Comments from US President Donald Trump stating that both nations are currently in final throes on work to bring about Phase 1 of trade deal into reality helped improve investor sentiment. However, Trump’s comments, which also included support for Hong Kong protestors resulted in mixed activity in several key Asian exchanges.
European market hours took the momentum from broad-based risk on investor sentiment and opened on a positive note. Prevalent risk appetite helped push major indices to four-year highs post which major risk assets and indices consolidated its gains. In the forex market, major global currencies continue to trade positive while gains remained capped as US Greenback also gained strength on trade deal optimism.
Precious Metals: Rare metal prices dropped for the second consecutive session and remained near two-week lows hit in the previous session as trade deal optimism underpins broad-based risk on trading activity. Further, USD’s boost for the second consecutive session also added pressure to greenback-denominated safe-haven assets causing rare metals to decline sharply.
Crude Oil: Crude oil price continues to hold steady and trade with a positive note as trade deal optimism favored an increase in demand for crude oil consumption. However, gains were kept in check as US API weekly inventory stockpile data saw build, which added pressure to demand to supply ration for crude oil in the global market.
AUD/USD: The pair trades with dovish bias as Aussie quarterly construction data saw fifth consecutive decline keeping price caped below the 0.6800 handle. USD’s boost for consecutive sessions also added pressure to AUD but the prevalent risk on investor sentiment and trade deal optimism helped cap decline keeping pair trading mostly flat albeit with visible bearish bias across Asian and European sessions.
On The Lookout: Traders continue to wait for concrete proof on progress in trade talks as they have become weary of headlines and comments from China and US hinting at progress but still remaining at an impasse. A proof of trade deal being signed by both nations will greatly help alter the directional bias of global equities and risk assets.
There are no new changes in the UK election and Brexit front leaving short term trading activity at the mercy of directional bias from speculative trades and news/data-driven momentum.
On the release front, traders await the release of Core Durable Goods Orders, Preliminary GDP, initial jobless claims, Chicago PMI, Pending Home sales, and EIA weekly crude oil stockpile data from the US economic calendar. Wall Street will also see the release of quarterly financial data from Deere & Company.
Trading Perspective: Forex market to trade range-bound as USD gains strength on trade deal optimism and expectation of positive outcome in macro data updates. Trade deal headlines also influenced upbeat price action for US futures trading in the international market ahead of US market hours, which along with positive cues from the European market, suggests Wall Street is set to see a bullish opening and upbeat price action in trading sessions today.
EURUSD: The pair continues to trade zig-zag around 1.10 handle as trade deal optimism, and broad-based risk appetite helped EURO conquer 1.10 handle. But lack of fundamental support for EURO bulls and Greenback’s rising strength across the week adds pressure keeping pair trapped in familiar price range limits. Traders now await US data for short term profit opportunities.
GBP/USD: The pair continues to trade positive as opinion poll still shows conservatives in the lead despite labor party reducing the gap earlier this week. Trade deal optimism also underpins GBP bulls, but firm USD caps the pair’s gains keeping it trapped below the 1.2900 handle and now await US data for short term profit opportunities.
USD/CAD: Following yesterday’s close, which saw a decline of 30 pip for USD, the pair trades flat as Canadian Loonie remains fundamentally supported by positive crude oil price and upbeat risk on investor sentiment influenced by trade deal optimism. However, USD’s strength in the broad market helped keep a decline in check while traders US data for short term profit opportunities and directional bias.
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