President Trump’s executive order for social media operators and US Prelim GDP data in focus.
Summary: European markets are continuing to see major indices and key equities trade on a positive note today. Investors in the region continue to cheer better than expected covid-19 recovery plan budget helping keep risk sentiment fundamentally well supported. Also gains in travel sector shares over easing lockdown cues added momentum helping risk assets and indices maintain day long positive price action. Some level of caution remains in the market over escalating Sino-U.S. tensions, but they are yet to cause a major change to the international market’s directional bias at the moment.
Rare Metals: Both gold and silver are trading positive in the spot and futures market today. As President Trump has promised to take action against China for moving forward with its new security law, which allows China to interfere with Hong Kong, safe-haven assets are seeing a spike in demand, helping rare metals stay above key support levels.
Crude Oil: Crude oil prices in both WTI and Brent futures and indices are range-bound with slightly positive bias. While US API weekly stockpile data released yesterday showed some level of build and Sino-U.S. tensions are on the rise, traders have mostly taken into account possible disruptions that could develop from the same, resulting in crude oil price remaining steady above key support levels.
DXY: US Dollar index, which measures the strength of US Greenback against six major rival currencies, is consolidating slightly above monthly lows. Having scaled fresh lows at 98.707 earlier in the day, USD managed to prevent further declines and began consolidating over caution stemming from a sharp rise in tensions between China & the USA.
On The Lookout: As the trading session moves to the latter half of the week, all eyes are focused on escalating tensions between China and the USA. With the Chinese government approving new security law that allows them to directly meddle in Hong Kong, President Trump has promised to retaliate against China, causing tensions to grow high similar to the recent past when trade war was at the peak. The ongoing tension, along with the US and China’s move to block each other’s product imports, is significantly affecting the tech and chip-making industry and in-directly affecting outlook for economic recovery.
President Trump is expected to sign an executive order, which will greatly affect social media sites’ freedom as Trump moves to take all measures in preventing an anti-conservative bias ahead of the election period. On the release front, the US calendar is set to see the release of Preliminary GDP/GDP Sales/GDP Price Index, Initial Jobless Claims, Pending Home Sales, and EIA crude oil inventory data.
Trading Perspective: Given mixed cues over hopes for economic recovery from lockdown easing and stimulus measures and caution from escalating Sino-U.S. tensions, US futures trading in the international market was mostly flat. US Prelim GDP & Jobless Claims to provide directional bias.
EUR/USD: The pair continues to trade positive in the international market today, holding steady well above 1.10 handle supported by strength from EC recovery plan budget updates. However, gains were capped as USD grew firm near weekly lows preventing EURO bulls from building a solid breakout rally. Traders await US data for short term profit opportunity but pair unlikely to scale 1.11 handle in the immediate future.
GBP/USD: The British Pound is trading with slight positive bias, but the price is mostly Rangebound slightly above weekly lows. USD’s weakness and cues from the Cummings scandal provide GBP bull with some level of support but pressure from UK’s refusal to extend the Brexit transition period and BOE’s remains Rangebound in 1.22 handle while traders await US data for short term directional cues.
USD/CAD: The pair is trading mostly flat in the international market as neither currency has the strength to build a solid rally now. Given crude oil’s consolidative price action and USD wallowing near monthly lows over geopolitical cues, the price action of pair is range-bound around mid-1.37 handle while traders await US EIA weekly stockpile data and Prelim GDP update for short term trading cues.
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