We're enjoying a much more uplifting end to the week as traders see cause for optimism in the two painful negotiations that have gripped markets in recent years.

Let's be honest, expectations were remarkably low at the start of the week that either set of meetings would yield a positive outcome, let alone both, but Thursday could go down as a turning point in both cases. I may be getting carried away there and come Monday, the US may be announcing new tariffs and the UK facing up to no deal again but we should enjoy it while it lasts.

In both cases, we have huge meetings today that will convert optimism into euphoria or leave us feeling silly for getting carried away in the first place. No big deal. Trump welcomes Chinese Vice Premier Liu He to the White House after productive talks with his trade team on Thursday in what could be the first step towards de-escalating the trade war that has plagued the global economy for the last year.

Boris has always been good with words but traders were delighted at the joint statement from Johnson and Varadkar, in which they agreed that they could see "a pathway to a possible deal". This could prove to be nothing more than empty words but it does at least sound more positive, although the DUP may be a little more apprehensive.

Sterling soared 2% on the joint statement and is adding to these gains today. Despite the threat of no-deal there has been bullish pressures building in the pound which perhaps indicates that traders either don't buy Johnson's warnings and expect an extension, or they think his efforts will bear fruit. They leapt at yesterday's news though.  

 

Oil jumps on tanker attack

Oil prices are up around 2% today following reports of an attack on an Iranian oil tanker in the red sea. Traders may not be concerned about lost output in this case but the suggestion is that the missiles came from Saudi Arabia which could represent an escalation in the region after a period of calm following the attack last month.

Once again though, traders seem reluctant to price in increased geopolitical risk, instead fully engrossed in the global growth narrative and the pressure that will put on crude prices. Oil had already been given a lift by progress in Washington yesterday as traders celebrated the perceived reduced risk of recession.

 

Gold vulnerable as Brexit and trade talks progress

Gold prices are recovering a little this morning on the back of the Iranian oil tanker attack to trade around $1,500. They had slipped back to $1,490 on Thursday on the back of the positive developments on the trade war and Brexit. If both of these can maintain their positive momentum on Friday, gold could come under some serious pressure and $1,480 will once again look very vulnerable. $1,460 is the next test for gold, with it having found support here earlier this month but further downside could be on the cards.

This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities.

Opinions are the authors — not necessarily OANDA’s, its officers or directors. OANDA’s Terms of Use and Privacy Policy apply. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.

Analysis feed

Latest Forex Analysis

Editors’ Picks

EUR/USD nears weekly highs as risk-on returns

The EUR/USD pair was dragged higher by a soaring Pound, now hovering around 1.1040. The market is all about sentiment, and this last dependent on Brexit and the US-China trade relationship.

 

EUR/USD News

GBP/USD surges to 5-month highs on reports of a draft Brexit deal

GBP/USD has leaped toward 1.28, hitting the highest since May. Reports suggest that the UK and the EU are zooming in on a deal. Details are awaited and negotiations continue.

GBP/USD News

USD/JPY in search of a firm direction, stuck in a range below mid-108.00s

The prevalent risk-on mood weighed on the JPY’s safe-haven status and extended support. A sharp fall in the US bond yields undermined the USD and failed to impress bullish traders.

USD/JPY News

Cryptos: Incumbents don't know to play well

The Libra project led by Facebook remains on track despite the first defections. Those who have abandoned the project are mostly payment gateways. Bitcoin's lack of tone weighs on Ethereum's mood.

Read more

Gold slumps to $1,480 area on Brexit hopes

The troy ounce of the precious metal continued to weaken in USD terms in the American trading hours as markets cheered reports claiming that the European Union (EU) and the United Kingdom (UK) are closing in on a draft Brexit deal that could be announced before the end of the day on Tuesday.

Gold News

Forex Majors

Cryptocurrencies

Signatures