European equities positive, US macro data in focus. Chinese stimulus update provides fresh bullish cues while US T.Yield inversion influenced recession woes and global economic slowdown concerns weigh down market bulls.
Summary: Asian markets saw major risk assets, bench market indices and key stocks trade in mixed momentum despite headlines hinting at further stimulus from central banks. Japan, Singapore and Australian stock markets saw dovish price action on global economic slowdown woes while Chinese indices and equities closed positive for second consecutive session. Chinese state planner has released an update hinting at plans to boost disposable income for 2019 and 2020 in hopes of encouraging consumption during times of slow economic activity. European markets on the other hand saw all major bench mark indices, stocks and F&O’s from all major European stock exchanges trade positive supported by boosted risk appetite and positive investor sentiment from Chinese stimulus updates and gains from chipmaker stocks. However, there was some investor concerns owing to delayed start of UK’s FTSE caused by some technical glitch. Forex market is seeing major global currencies trade positive on USD’s weakness but USD saw some level of strength on safe haven demand capping gains to some extent.
Precious Metals: Precious metals are trading in red owing to profit booking activities and gains in equities which diverted fund flow from safe haven assets. However, price remains well near weekly highs as risk aversion among global investors still remains high keeping price well above critical levels.
Crude Oil: Crude oil is trading positive today after sharp declined influenced by Chinese threats and US inventory boost as recession fears ease. But gains remain capped as OPEC outlook for the year ahead took a dovish turn with comments suggesting demand may be low for rest of 2019.
AUD/USD: The Australian Dollar is trading positive in the global forex market today as government bond yields rose underpinning AUD bulls. Boost in risk appetite from news of Chinese stimulus and USD weakness also supported Chinese proxy but gains remain capped below 0.68 handle across the day.
On The Lookout: US Government bond yields continue to extend decline (Inversion) boosting fears of recession in USA. Meanwhile, prolonged Sino-U.S. trade war woes also affects risk appetite owing to concerns of impact on global economic activity while Chinese Stimulus update provides temporary relief. There are now new major developments in Brexit progress either keeping investors cautious preventing medium to long term bets while headlines and data driven volatility provides investors with plenty of short term profit opportunities. On the economic calendar, US market is set to see release of OPEC monthly report, building permits, housing starts and Preliminary Michigan Consumer – expectations, sentiment, current conditions and inflationary expectations while Canadian calendar is set to see the release of foreign securities purchase data.
Trading Perspective: Forex market to see mixed activity as USD regained some strength over reassurances from US President Donald Trump on positive outcome in trade deal with China. However, USD gains are likely to be capped owing to steady decline in US T.Yield inversions. On the earnings calendar, there isn’t any release from major corporate firms that could influence a favourable momentum. However, improved risk appetite in international market, previous session gains in US indices and Nvidia/Walmart earnings helped US index and stock futures trading in the international market see positive price action. US Wall Street is expected to see some level of positive price action but as trading session heads to week’s close Wall Street is likely to see dovish closing for the week.
EUR/USD: The pair is seeing dovish activity as EURO bulls lost support owing to decline in EU government bond yields. However, declines were limited owing to USD’s weakness in broad market over T.Yield inversion. Traders now await US macro data for short term profit opportunities as trading session comes to close for the week.
GBP/USD: The British Pound continues to trade positive on lingering influence from previous session gains and USD’s weakness. However, gains remain capped below 1.22 handle as GBP bulls lack strength for breakout. For now the pair trades positive near mid-1.21 handle which if remains steady until end of the day the pair will break a 3 week long losing streak. Traders now await US macro data for short term profit opportunities as trading session comes to close for the week.
USD/CAD: The pair is trading in red today as USD’s weakness influenced by US T.Yield inversion combined with recovery in crude oil price weighed down USD. The commodity linked currency remains strong across Asian and European session. Traders now await US and Canadian macro data for short term profit opportunities as trading session comes to close for the week.
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