Fresh geo-political cues stemming from Brexit and possible EU-US trade war affect market sentiment. Traders await fresh headlines from the US on a trade deal and Trump impeachment proceedings.
Summary: Global equities are seeing mixed activity on geo-political cues. Having grown immune to recent trade deal-related headlines, Chinese equities declined while other major Asian indices and equities closed on a relatively positive note.
European markets opened positive and maintained a risk on investor sentiment supported by headlines and data-driven momentum. News of Izuzu tie-up with Volvo caused Volvo shares to spike, which in-turn underpinned major indices and equities on auto market trade-dependent European markets.
Further, defensive buying and rebound post previous session’s Brexit headlines driven decline also underpinned positive activity in the market today. Amid lack of fresh updates to stimulate and support market bulls, major global currencies lost the recent momentum give prevalent cautious investor tone over repetitive lack of clarity on headlines hinting at trade deal progress resulting in price action trapped well inside familiar price levels.
Precious Metals: Rare metals are continuing to trade positive but has failed to see any major price leap in both cheaper option such as Silver and costly metals such as gold and palladium. While re-emerging caution surrounding trade deal progress & Brexit brings caution into market prevalent risk on investor tone caps any prospects for gains.
Crude Oil: Crude oil price saw sharp gains in Pacific-Asian session over data-led gains resulting in price moving to three-month highs. But the unexpectedly high build in API weekly crude oil stockpile data from the US offset gains leading to declining from intra-day highs. However, the decline was capped on the prospect of extended supply cut from OPEC moving forward.
AUD/USD: The pair is trading positive in the global market today after quite some time as modest USD pullback finally gave AUD bulls some breathing space. Prevalent risk on trading sentiment also provided AUD bulls with some support but broad-based caution stemming from escalating geopolitical woes acted as foil capping AUD’s gains.
On The Lookout: Traders are now on the lookout for proceedings on three distinct events. While the tensions surrounding trade war between China and the US is yet to die down, a recent move from US passing legislation facilitating the imposition of tariff on German companies dealing with Russian Nord Stream 2 gas pipeline caused traders to worry about the possibility of a new trade war erupting between Europe and USA.
Comments from UK PM Johnson stated that he plans to use his new deadline limitations for Brexit to gain more concessions and speedy resolution for Brexit from the EU. This caused tensions of no-deal Brexit to rise again. On the release front, the US calendar remains relatively silent aside from the release of EIA weekly crude oil data while the Canadian calendar will see the release of core CPI data.
Trading Perspective: Broad-based market sentiment-driven price momentum will see major forex pairs trade well within intra-day price levels. Trump impeachment vote is set to take place in house of representatives which will see members vote on two articles charging the president with abusing his office and obstructing congress, but the outcome is unlikely to have any major impact on market price action regardless of its impact on citizens sentiment over upcoming election proceedings as Trump is unlikely to be ousted today. Amid divided investor sentiment in broad market and FedEx slide, US futures trading in the international market were down ahead of Wall Street opening, which suggests wall street is set to see flat activity today.
EUR/USD: The pair is trading flat but remains steady above 1.11 handle as EU area data saw a positive outcome in business expectations and neutral inflation data. Escalating caution on geopolitical woes added pressure to EURO capping gains. Traders now await fresh headlines and data from the US for short term profit opportunities.
GBP/USD: The pair is trading with clear dovish bias as the latest proceedings made by UK PM Johnson have caused gains & positive sentiment from recent election euphoria to evaporate. The modest pullback in USD over trade deal caution helped prevent sharp declines. Traders await fresh Brexit updates amidst silent US calendar schedule for short term directional trading cues.
USD/CAD: The pair continues to trade with slight bearish bias albeit being trapped inside short price range limitations as the positive crude oil price is finally giving the commodity-linked currency Canadian Loonie a much-needed boost. Meanwhile escalating tensions surrounding trade deal offsets USD’s strength causing slight pullback for USD in the global market. Traders now await Canadian CPI and US weekly crude oil data for short term profit opportunities.
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