Risk appetite improved in European market hours but equities are mixed on cautious investor sentiment in the global market. Investors await macro data updates for short term directional cues.
Summary: Asian and European markets are seeing conflicting price action today. Investor sentiment in Asian market hours took a risk averse tone on cautious stance from US Federal Reserve and European Central Bank on economic growth prospects. This resulted in the major benchmark indices and risk assets across key Asian stock exchanges seeing dovish price action. Risk assets have been rickety in the market so far this year while bond market is seeing considerable level of activity as multiple reductions in growth forecast for the year ahead by International Monetary Fund and major global central banks have kept investors on edge so far this year. While escalating trade tensions between US & EU continue to weigh investor sentiment in the global market, European market is seeing positive price action today as EU agreed to push the deadline for Brexit as far as October 31, 2019. Given the delay of the one major event that had been causing high level of concerns in the European market so far this week, investor sentiment in European markets is relatively positive compared to other major global counterparts.
Precious Metals: Despite mixed price action in Asian and European markets, both gold and silver are trading in red today. There hasn’t been any major progress on E.U.-U.S. trade war aside from headlines influenced escalation in trade tensions. Given that headlines on same has calmed down, Brexit has been delayed and there is no major update or progress in Sino-U.S. trade wars, there is no driving force for save haven assets resulting in dovish price action.
Crude Oil: Crude oil price saw slight downward price action today influenced by build in US EIA weekly crude oil stockpile data. However, supply disruption owing to tensions in Libya and Venezuela and OPEC enforced production and supply cut agreement serve as factors supporting Crude oil bulls while maintaining supply to demand ratio in favour of Crude oil bulls. This has helped limit decline and keep the price well near 2019 highs hit earlier this week.
AUD/USD: The pair is trading range bound today as mixed macro data from China failed to provide support to AUD bulls. But weak US Greenback in the global market and optimism surrounding Sino-U.S. trade talks continue to provide Australian Dollar with some level of fundamental support preventing sharp declines to the downside. The pair has firm foothold at 0.71 handle above which the pair is seeing range bound price action.
On The Lookout: With Brexit woes out of the picture following delay in deadline agreed during yesterday’s meeting, investor focus shifts to other major geo-political events. While there hasn’t been any solid progress between E.U. & U.S. on their trade war, tensions continue to remain high following US President Donald Trump’s comments earlier this week. Investors also expect more details on talks between China and U.S. and hope for announcement of date for Presidential summit between two nations to sign a trade deal before end of this month. Aside from geo-political events, investors are focused on macro data updates for short term trading and profit opportunities. US calendar will see release of PPI data, Initial Jobless Claims update and speech by FOMC members Bullard and Quarles and Bank of Canada governing council member Wilkins while Pacific-Asian market hours will see release of Singapore’s GDP data and Australia’s RBA financial stability review update.
Trading Perspective: Risk appetite in global market has shown improvement during European market hours. Given multiple high impact macro data updates, major risk assets are likely to see highly volatile price action in American market hours. Subdued USD is likely to influence some level of positive price action in major Forex pairs.
EUR/USD: The pair is holding steady well within weekly price range with range bound price action during Asian and European market today. European macro data saw neutral outcome and didn’t have any major impact on price action. EU-U.S. trade tensions keep gains in check while headlines on Brexit delay provides EURO bulls with fundamental support for positive bias in range bound price action. Investors now await US macro data updates for short term directional cues.
GBP/USD: The pair saw slight recovery action on news of Brexit deadline extension but the rally didn’t last long. Traders are not satisfied with progress as scenario within UK parliament still remains at standstill. With no clear decision to move forward and lawmakers involved in full on power play, it doesn’t look like there will be any solid progress in immediate future. This has resulted in the pair declining towards mid-1.30 handle. Investors now await US macro data update for short term trading opportunities.
USD/CAD: The pair is seeing upward price action as crude oil price fell in the global market. But gains have been capped owing to USD’s weakness in the global market. Also, crude oil price remains well near weekly highs despite decline in price action as OPEC supply cut enforcement and supply disruption from Libya & Venezuela continue to provide strong fundamental support. Investors now wait for US macro data updates for short term trading opportunities.