Equities Trade Positive on Chinese Cues, US Jobless Claims in Focus
On the macro data front, the US calendar sees the release of initial jobless claims and preliminary non-farm productivity data.
Cues from China on the tariff-related decision and easing virus outbreak woes help underpin risk sentiment in the global market.
Summary: Global equities are continuing to trade on a positive note over fresh cues from Chinese markets. China today announced that it is cutting its additional tariffs on US goods worth 75 Billion USD as per agreed upon during their Phase 1 trade deal agreement. This along with easing concerns surrounding the coronavirus outbreak helped improve risk sentiment providing market bulls with fundamental support, following positive activity in Asian markets.
European market saw also major indices and key stocks open on a positive note over continuous cues from China. De-escalation of the trade deal between China and the USA is a sign of improved economic and trade activities which helped boost risk sentiment in the trade-dependent European markets.
In the Forex market, major pairs are seeing mixed activity driven by macro data outcome.
Precious Metals: Rare metals price fell sharply in the global market as risk sentiment continues to improve on reports of a possible coronavirus breakthrough and news of tariff cutbacks from China. Further, firm USD added pressure on a high exchange rate for traders who hold other major global currencies.
Crude Oil: Crude oil price saw mixed activity but futures held above key critical support levels. Reports of tariff cut back and OPEC committee’s decision to consider deeper supply cuts provided support while reports of a possible decrease in demand from China on virus outbreak concerns caused the price to fluctuate.
AUD/USD: The pair is trading positive today but gains are mostly capped and price held steady around mid-0.67 levels. Cues from China on US goods tariff cutbacks provided fundamental support but disappointing retail sales data for December in Australia weighed down AUD.
On The Lookout: China’s tariff cut back citing trade deal agreement is the first major change in trade relations since Phase 1 was signed by both nations last month. However, traders still remain cautious over one particular headline from China which hinted at a possible troublesome scenario. While the government takes a stance on following through with trade deal agreement for now at least, the local headlines hinted at the possibility where China can invoke disaster clauses in the agreement citing the impact of a virus outbreak on the Chinese economy to skip completing target agreed upon in Phase 1 trade deal.
On the macro data front, the US calendar sees the release of initial jobless claims and preliminary non-farm productivity data. Later in the Pacific Asian session, there is a speech from RBA’s Lowe which is also under investors’ radar.
Trading Perspective: Fresh geopolitical cues led developments have helped improve risk sentiment which combined with cues from the international market suggest Wall Street is set to see positive opening today. US futures trading in the international market saw positive activity which brings the possibility of major indices trading near record levels. On the earnings front, Wall Street will see the release of quarterly data from – Activision Blizzard, Baidu, Estee Lauder, ICE, Kellogg, Motorola, Norton LifeLock, S&P Global, T-Mobile US, Twitter, and VeriSign.
EUR/USD: The pair continues to trade in red despite the broad-based spike in risk sentiment. From a technical standpoint, the pair is currently experiencing an aggressive sell-off pattern with EURO losing support around the 1.098 handle. For now, the price keeps oscillating around 1.097 handle but traders await cues from US data for short term profit opportunities.
GBP/USD: The British Pound is seeing sharp loss against US greenback and price is currently steady near weekly lows. The pair is steady near mid-1.2900 handle having edged lower in the early European session. Traders now await US data for short term profit opportunities.
USD/CAD: The pair is trading flat today as USD remains firm supported by lingering caution in the market. However, the upbeat crude oil price in the global market underpinned Canadian Loonie resulting in a slight dovish edge to price activity. Traders now await US data for short term profit opportunities.
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Reporting by Karthik Sivasubramaniam. Filed 6 February 2020, 21:52 GMT.
