President Trump’s actions trigger an escalation in China-U.S. tensions, US NFP in focus.
Summary: European market today saw key indices and equities edge lower at the opening on cues from the Asian market. US President Trump’s signing of an executive order banning transaction with Chinese video service app TikTok and IM app We Chat came as major blow causing the stocks of parent firms listed in Asian markets to plunge down sharply.
This move escalated tensions between two nation causing risk sentiment to edge lower in the global market. But market bulls in European market gained support and capped intra-day decline as Trade balance data from Germany and France and Industrial Production data from Italy, Germany and Spain saw better than expected outcome providing strong support to expectation for fast economic recovery in pandemic hit European region.
Rare Metals: Both gold and silver scaled fresh record levels amid weak USD and escalating geopolitical tensions. But better than expected macro data updates put a halt to safe-haven asset’s rally. While both Silver and Gold are on the path to positive weekly close, profit booking activity is expected given recent gains as price tested new record levels.
Crude Oil: The price of major oil assets in the international market remains range bound, and key benchmark indices even display signs of dovish activity. As OPEC gears up to boost production and concerns of glut scenario continues to escalate despite recent US weekly stockpile data, the price has turned dovish within familiar price levels.
DXY: The US Dollar which remained stable near week lows has managed to slightly rebound yet again as news of US plans for sanctioning Hong Kong leader Carrie Lam made headlines in late European market hours.
On The Lookout: With less than a week left for China-U.S. meeting to review phase 1 trade deal proceedings, tensions reached new highs as President Trump signed a new executive order banning transactions with two major China-based social media apps – We Chat and Tik Tok. Later in the day on macro data front focus shifts to US Non-Farm Payroll data.
Aside from Payroll data, there is also the release of average hourly earnings reports from the USA while Canadian Calendar sees the release of Employment Change data & Unemployment rate. On the earnings calendar, Wall Street is set to see quarterly data from Ventas and Kimco.
Trading Perspective: US Futures trading in the international market saw price edge lower as tensions between China and the US reached new heights. Further caution ahead of US payroll data also affected mood given predictions of slowing US job growth. Wall Street is expected to open flat post which cues on proceedings of stimulus talks and NFP will decide directional cues.
EUR/USD: The pair is trading with clear dovish bias today as pair fell below 1.18 handle on USD rebound. But positive EU area macro data helped prevent decline below the mid-1.17 mark. Traders now await US macro data for short term profit opportunities.
GBP/USD: The pair is trading with clear dovish bias as USD weakness which led the recent positive price rally came to an end of Greenback’s rebound. The price fell below 1.3100 but still remains above the 1.305 mark as predictions hint at slowing US job growth. Traders now await US data for short term profit opportunities.
USD/CAD: The pair is trading with clear positive bias but still remains below 1.34 mark for now. USD rebound in later European market hours failed to trigger a breakout rally, but price maintains positive bias for now. Traders now await US data for short term profit opportunities.
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