US indices hold gains

US indices clawed back early losses to trade marginally positive in slow trading activity during the Asian morning session. US indices edged higher by between 0.02% and 0.07% led by the NAS100 index.

The latest news from the US-China trade talks has remained positive. It has been announced that US President Trump is scheduled to meet China’s Vice Premier Liu He at 1845GMT today (0245 Saturday Singapore time). Yesterday, Trump said the first day of talks had gone “very well” while Liu He had said that China was willing to reach agreement on matters that both sides care about and to prevent an escalation in friction between the two sides. So far so good.

 

Pound clings on to extreme gains

Yesterday’s news that discussions between Irish PM Varadkar and British PM Johnson had produced a possible pathway to an agreement on the Irish backstop sent the pound soaring, jumping the most in seven months to hit the highest in more than two weeks versus the US dollar. The FX pair has been stable this morning, trading in a tight range to stand at 1.2437 currently.

The pair closed above the 100-day moving average at 1.2414 for the first time since September 24 with the next technical resistance points possibly at the September high of 1.2583 and the 200-day moving average at 1.2713. Of course, if these news headlines fail to produce anything of substance, then these resistance points will become irrelevant and we’ll head back down again.

GBP/USD Daily Chart

Source: OANDA fxTrade

 

Fed speakers mixed

In speeches overnight, FOMC members gave mixed outlooks. Fed’s Kashkari (dove, non-voter) said another rate cut would be warranted, and he would support another 25bps rate cut, if data continues its trend. Meanwhile Mester (hawk, non-voter) expects the US economy will avoid a more serious downturn. He reiterated that he was against the September cut, but was content to keep the shallow policy path at the moment in hopes of firmer inflation down the road.

 

The ECB quandary

Minutes of the last ECB rate meeting showed that a clear majority of members supported some kind of easing, either a resumption of QE or further rate cuts. Some policy makers argued for a 20bps rate cut at the meeting instead of QE, while others wanted a resumption of QE.

Christine Lagarde is due to take over the reins of the ECB on November 1 but the next ECB rate meeting is scheduled for October 24, so it begs the question whether Draghi will go out in a blaze of glory with the next easing phase, or if he, or the European economy, can wait for the new guard to be in place. Either way, it looks as if Lagarde will inherit a slightly fragmented committee.

 

Central bank speakers close off the week

It’s a relatively mundane finish to what has been a busy week. The final reading for Germany’s CPI in September is not expected to bring any changes to the first estimate. We also have speeches form ECB’s Draghi and De Guindos to look forward to in the European session, while the North American session sees Canada’s employment report for September and speeches from Fed’s Rosengren and Kaplan. Data is confined to October’s Michigan consumer sentiment, which is expected to slide to 92.0 from 93.2.

 

Have a great weekend. Hope Tokyo is safe as typhoon Hagibis heads there, disrupting some of the Rugby World Cup games.

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 consolidates in a range below $1500 mark

Gold extended its sideways consolidative price action on Tuesday and remained confined in a narrow trading band, below the key $1500 psychological mark.

Gold News

Forex Majors

Cryptocurrencies

Signatures