Equities Recover on Trade Optimism Ahead of G20 Summit, US GDP in Focus

Trade optimism on headlines driven momentum support market bulls, but caution lingers on update from China. Traders now await US GDP update for short term profit opportunities.

Summary: Global equities are seeing positive price action in the global market today as traders prepare for updates on two day G20 summit scheduled to begin tomorrow in Japan. Optimism surrounding possibility of trade truce between China and U.S. as per media reports as both Presidents are set to meet for first time since December 2018 underpins market bulls. But trade truce could be an unlikely outcome as China has set for a demand to remove tariff on Huawei ahead of G20 summit. News driven rally and positive cues from Asian market has helped European markets open positive. Trade dependent economies in Europe are seeing positive activity as traders hope upcoming G20 summit could help prevent additional 300 Billion USD tariff be imposed on Chinese goods. USD has managed to hold onto recent gains from rebound activity despite positive prevalent risk on trading activity capping gains of major global currencies.

Precious Metals: Precious metals declined as risk appetite boomed in the market on trade deal optimism influenced by headlines. Further, strong USD in the market also decreased demand for precious metals as costly USD means higher exchange rate.

Gold Daily Graph
Gold Daily Graph

Crude Oil: Crude oil price is trading range bound with slight positive bias in the global market today. US EIA weekly crude oil stockpile saw draw in inventory data. Further, optimism surrounding sino-u.s. trade talk also provide some level of support which combined with OPEC enforced supply cut and middle east tensions keep crude bulls supported fundamentally.

USD/JPY: The pair saw positive price action earlier in the day climbing to one week tops above 108 handle on headlines of possible china and US trade truce. But update from china that truce will only happen if US lifts tariff and ban on Huawei caused momentum to die down and pair trading flat near 108 handle.

On The Lookout: The immediate focus of investors in now on US macro data updates – GDP and pending home sales data. But main focus still remains on geo-political events. While headlines from US on possibility of trade deal between China and US boosted sentiment earlier in the day, update from china hinting that truce will only happen if US lifts ban on Huawei caused bulls to lose steam. Further, G20 summit which had been in backseat till date also began garnering attention on recent headlines. Leaders of G20 summit along with all member nations from EU are aiming to push forth changes to WTO which was agreed upon last year to ensure monitoring, negotiating and dispute settlement activities are managed in such way that global economy is not affected in future similar to how it is being impacted over Sino-U.S. trade war now.

Trading Perspective: Forex market is likely to see price action continue momentum from European market hours as USD is likely to remain strong for rest of the day. Trade truce hopes have managed to underpin market bulls helping US stock and index futures trading in international market ahead of Wall Street opening see positive price action. This suggests US Wall Street is likely to see positive price action in the North American market hours today.

EUR/USD: The pair declined earlier in the day but has managed to reverse loss incurred in early trading session. Further, trade optimism between China and U.S. and positive German CPI data helped the pair trade with solid positive bias. Traders now await US GDP and pending home sales data for short term profit opportunities.

GBPUSD Trade Optimism
GBPUSD Daily Graph

GBP/USD: The pair traded positive in the global market on trade optimism between US and China. However, conflicting signals from Boris Johnson in his speech has resulted in gains remaining capped as the pair aims to breach mid-1.27 handle. Traders now await US GDP and pending home sales data for short term profit opportunities.

USD/CAD: The pair continues to trade near multi-month lows, but CAD is growing weaker as Crude oil price turned wobbly earlier in the day regardless of cues from Middle East tensions. However, Sino-U.S. trade optimism supported CAD bulls keeping USD in check. Traders now await US GDP and pending home sales data for short term profit opportunities.

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