Speculative bets go down and bulls lost steam as trade headlines lack proof of solid progress in talks between two nations.
Summary: The global equity market is seeing positive price action over trade deal optimism induced rally however, lingering cautious investor sentiment is visible from mixed activity in major indices. The debut of Alibaba shares in Hong Kong gave Asian markets a solid positive boost. Also, headlines stating that Chinese Vice Premier Liu He & US representatives Robert Lightizer and Steven Mnuchin held a phone call to discuss issues pertaining to Phase 1 of trade deal helped improve optimism and risk appetite keeping major stocks trading near multi-year highs.
European shares opened positive on cues from the Asian market but several major shares and indices saw price take a sharp dive as cautious mood prevails given traders reluctance to place bets from repetitive headlines which lacks solid clarity. In the forex market, risk currencies traded positive but gains were capped as headlines of talk between Sino-U.S. representatives gave USD a slight boost.
Precious Metals: Rare metals are seeing positive price action as demand for safe-haven assets remain high over spike in cautious investor sentiment as investors grow immune to trade headlines which lacks clarity. Spike in USD capped gains but the positive bias remains steady in the rare metals market.
Crude Oil: Crude oil price spiked in the global market following news of talks between Sino-U.S. representatives over issues on the trade deal. As hopes for a resolution of trade deal rose highs, demand outlook for crude oil consumption rose in favor of crude oil bulls providing fundamental support.
AUD/USD: The pair saw a sharp spike earlier in the day but lost most of its gains when USD gained momentum. The pair continues to trade positive on broad-based risk appetite. But firmer USD and lingering caution kept AUD bulls in check causing price action to be mostly flat.
On The Lookout: All eyes are locked on trade deal proceedings, while headlines continue to hint at some sort of progress, there is a clear lack of proof on any sort of solid progress between two nations. Traders have finally become wary of repetitive headlines that lack proof and just drive speculative trading.
On the UK election front, opinion polls are starting to show data which suggests Labor party is beginning to close the gap. This has caused tensions surrounding Brexit to spike as a win for the labor party would lead to messy prolonged Brexit.
On the economic calendar front, traders await the release of US preliminary goods trade balance, new home sales, and CB consumer confidence data. On earnings calendar front, traders await quarterly financial data from Autodesk, best buy, Dollar Tree and Key sight technologies.
Trading Perspective: Forex market will see major pairs continue to trade positive on trade optimism led rally. Wall Street futures trading in the international market was flat on account of mixed investor sentiment ahead of US market hours which suggests Wall Street will see a subdued opening as traders await further trade headlines for directional cues.
EUR/USD: The pair is trading above 1.10 handle but remains trapped well within familiar price levels as EURO lacks the strength to make a breakthrough. Trade deal-related headlines gave EURO some level of boost but the spike in USD capped EURO’s gains. Traders now await US data for short term profit opportunities.
GBP/USD: The pair declined as GBP lost ground over recent developments in opinion poll data which sees labor party closing its gap against conservatives. Spike in USD also added pressure on GBP bulls causing further decline. Traders now await US data for short term profit opportunities.
USD/CAD: The pair is trading steadily above 1.3300 handle but gains are capped as a spike in crude oil price and trade deal optimism underpin CAD. However, firm USD continues to prevent CAD from gaining breakout keeping the price of pair capped inside shorter price range limits. Traders now await US data for short term profit opportunities.
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