Trade deal headlines in focus, investor sentiment mixed ahead of tomorrow’s trade deal signing meet.
Summary: Global equities saw a mixed price action in the second trading session of the week. News of Chinese representative Mr. Liu He’s arrival in Washington ahead of tomorrow’s schedule to sign Phase 1 trade deal with the USA helped improve optimism and risk appetite. But investors soon booked profits post which trading activity showed an increase in cautious trading activity as traders prepare to either take advantage of or step away from news-driven volatility expected to hit markets in the next 48 hours. European market opened on a positive note but was mostly flat while the forex market also saw major forex pairs take a mixed stance in market hours today.
Precious Metals: As optimism surrounding trade deal peaks, demand for rare metals commonly viewed as safe-haven assets declined sharply. Further, an increased fund flow to the bond market on lingering caution in market mood also diverted funds from rare metals as they displayed higher value given improving macroeconomic backdrop.
Crude Oil: Crude oil price is seeing a sharp upsurge in international futures as trade deal optimism is viewed as a sign of positive global economic growth outlook in the immediate future. This along with recent comments from Saudi confirming OPEC’s stance on keeping supply cut unchanged underpinned crude oil bulls pushing demand to supply ratio in favor of positive price activity.
AUD/USD: The pair is trading positive in the global market as trade deal optimism and the boost in mining stocks underpinned AUD bulls. Further, positive trade data from China also supported AUD bulls but the impact from bushfire and lingering caution caps gains preventing the pair from gaining a strong foothold above the 0.6900 handle.
On The Lookout: Earnings reports for the last quarter are set to hit the market in full swing. In North American market hours, Wall Street is set to see financial data from major US banks – J.P. Morgan Chase, Wells Fargo, and Citi group.
Further updates from Blackrock investment firm are in focus following the recent announcement from the world’s biggest portfolio investor which warned the market of a major change in the way it allocates funds in order to better support measures pertaining to risks of climate change. Headlines of trade deal signing ceremony are expected from the White House as the deadline for signing Phase 1 of the trade deal is less than 24 hours. On the release front, traders await a speech from US Fed Williams and API weekly crude oil stockpile data.
Trading Perspective: While positive earnings data from major US banks are sign for upbeat activity in Wall Street later today. However, Wall Street is expected to trade flat as investors displayed a cautious tone ahead of tomorrow’s trade deal meeting resulting in funds being diverted to the bond market which offers better stability and less volatile price action.
EUR/USD: The pair is trading mostly flat despite broad-based risk on market mood influenced by trade deal optimism. There seems to be strong resistance around the 1.1150 handle preventing further upside move. Traders await US data for short term profit opportunity while directional bias remains neutral.
GBP/USD: While the pair faced some dovish pressure over recent comments from BOE officials which opened doors for rate cut possibility, the pair still managed to retain some level of positive bias. Traders now await US data for short term profit opportunities.
USD/CAD: The pair trades flat with a clear lack of directional strength on either side as trade deal optimism and rebound in risk appetite and crude oil price underpins CAD while USD gains support from lingering caution. However, neither side managed to posses strength required for breakout resulting in flatlined price action. Traders now await US data for short term profit opportunities.
