Fluid situations

Global markets took an upbeat tone overnight, preferring to concentrate on known knowns rather than known unknowns or unknown unknowns. Following Washington’s decision to place Huawei on a blacklist that could ban them from sourcing vital US technology if enacted, the street appears to have temporarily given up trying to predict the fluid situation that is US-China trade relations and concentrate on the here and now.

The here and now on Wall Street was strong US housing starts and sparkling results from heavyweights Walmart, Nvidia and Cisco Systems, suggesting yet again that despite the international noise, the US economy is still moving full steam ahead. Following rises yesterday in Europe and China, the S&P finished 0.90% higher, the Nasdaq climbed 1%, and the Dow Jones rose 0.80%.

European Union inflation and the US Michigan Consumer Sentiment are the heavyweight data points due this evening to finish the week. They could tell a tale of two halves, with the US consumer alive and well while EU inflation continues bumping along the floor. Here in Asia, the New Zealand dollar (NZD) continued its weekly fall following uninspiring PPI data this morning.

We have important data from two trading bellwethers in Asia today. Singapore released its Balance of Trade at 0830 Singapore time (SGT), while Hong Kong releases its quarterly GDP Growth Rate at 1630 SGT. The street will be looking for a continued recovery in Singapore’s non-oil exports and a bounce back in Hong Kong’s quarterly GDP growth following a slump of 0.50% previously. Like Australia and New Zealand, Singapore and Hong Kong have a massive correlation to China growth and the data will be closely watched to gauge the state of play in Asian trade. Poor prints could see a negative overflow to regional markets.

 

Currencies

The US dollar maintained its tight grip on markets overnight following a strong performance by Wall Street with the dollar index rising 0.27%. The Australian (AUD) and New Zealand dollars (NZD) continued their slump with tomorrow’s Aussie elections weighing heavily on the former. The AUD fell 0.50% to 0.6890 with the 2016 lows around 0.6830 now in plain sight.

The euro fell ahead of upcoming European elections to 1.1175 while the British pound (GBP) continued its terrible run, falling below 1.2795 on Brexit uncertainty. The chances of a feasible Brexit solution being achieved seem to be falling by the day, much like the governments chance of re-election – any light at the end of the tunnel being a train coming the other way.

 

Equities

Assuming no surprises from Singapore data or President Trump’s Twitter account, regional markets should follow Wall Street’s lead and begin the day on a positive note. The march higher will be tentative at best though with sentiment both incredibly cautious and fragile. With the weekend upon us and plenty of unknown unknowns that could occur over the weekend, volumes will likely remain light in Asia today.

 

Oil

Middle East tensions were front and centre overnight as Saudi Arabia unsurprisingly blamed Iran for the recent sabotage on its tankers and oil platforms. Brent Crude rose 1.15% to USD72.70 a barrel and WTI climbed 1.65% to USD63.05 a barrel. The repricing of geopolitical threats has merit, although the likelihood of open hostilities from or against Iran remains low in my opinion.

Brent Crude has technical resistance in the USD75.00 a barrel area and WTI nearby at USD63.50. With quite a lot of politics and supply crunches already built into prices and the spectre of trade wars looming large, the geopolitical temperature will probably have to ratchet much higher to maintain a sustained rally through the resistance levels.

 

Gold

Gold collapsed by USD10 to USD1,285.00 an ounce overnight erasing its entire week’s gains in one fell swoop. A strong dollar and bond yields creeping higher took their toll. However, a global sense of disbelief that the trade wars will be taken to the wire drained the safe-haven harbour, flushing gold out with it.

The fall overnight will be tremendously disappointing to gold bulls, as the yellow metal exhibited a rise up the stairs, down via the 10th-floor window price action. Gold remains in a broader USD1,280.00-1,300.00 consolidation phase. What was emphasised by the overnight price action was that gold’s fate is not its own, and unless there is some news today, Asian trading will likely be tepid at best.

Foreign exchange transactions carry a high degree of risk and any transaction involving currencies was exposed to, among other things, changes in a country's political condition, economic climate, acts of nature - all of which may substantially affect the price or availability of a given currency. Speculative trading in the foreign exchange market is a challenging prospect with above average risk. You must therefore carefully consider your investment objectives, the level of experience and appetite for such risk before entering this market. Most importantly, do not invest money that you are not in a position to lose. Also, trading on a margin basis means that any market movement will have a proportionate effect on your deposited funds, this can work for you as well as against you. The possibility exists that you could sustain a total loss of initial margin funds. OANDA's trading system is designed to liquidate all open positions automatically if your margin deposit is in jeopardy so that you cannot lose more than the funds you have on deposit in your account. It is encouraged that you employ such risk-reducing strategies as 'stop-loss' or 'stop-limit' orders, but you should be aware that market conditions may make it impossible to close out your order at the level specified. There are also risks associated with utilizing an Internet-based trade execution software application including, but not limited to, the failure of hardware and software. OANDA maintains backup systems and contingency plans to minimize the possibility of system failure. Your Margin Account with OANDA was ​not insured under any state or federal insurance program, or by any other entity. In the event OANDA should become insolvent or file for protection under the bankruptcy laws, it is possible that you would lose the entire amount in your Margin Account. Please be sure to read our complete Risk Disclosure Statement and contact us if you have any questions or concerns.

Feed news

Latest Forex Analysis

Editors’ Picks

EUR/USD recovery reaches critical 1.1170 price zone

The EUR/USD pair bounced from a fresh multi-year low of 1.1106, although the advance stalled in the 1.1170 region, with the pair having been unable to extend gains beyond it since last Friday. Bulls to become more courageous if the advance extends beyond 1.1200.

EUR/USD News

GBP/USD modestly up for the day after flirting with 1.2600

The GBP/USD pair is poised to close in positive ground for the first time in ten days, a result of an extremely overbought dollar and US data giving bulls a reason to take some profits out of the table. Brexit chaos persists, Pound gains unlikely.

GBP/USD News

USD/JPY slumps to mid-109s as 10-year US T-bond yield drops 4% today

The bearish pressure surrounding the USD/JPY pair gathered strength in the American trading hours and dragged the USD/JPY pair to a weekly low of 109.50.

USD/JPY News

Market confidence in doldrums as PMI surveys plummet

US and German PMI surveys failed to muster any form of confidence in the growth picture, with stocks and the dollar under pressure today. The UK political picture looks bleak, with the chances of a no-deal Brexit or general election rising with May’s departure. 

Read more

Gold jumps to weekly tops and retreats, still well bid near $1280 level amid risk-off mood

Gold built on its intraday positive move and spiked to fresh weekly tops, around the $1284 region in the last hour, albeit retreated a bit thereafter.

Gold News

Majors

Cryptocurrencies

Signatures