Markets Spurred By Trade Optimism

John Benjamin Orbex

The US-China trade talks continue to drive the markets. Appetite for risk assets grew as Beijing announced the details of the phase one deal.

As part of this, both sides will be pulling back on the tariff hikes even if both sides reach a partial deal. So far nothing has been confirmed, but investors remain optimistic that the developments will lead to a formal announcement.

EU Commission Lowers Growth Forecasts

The European Commission released the fresh Autumn forecasts for the eurozone. The commission lowered growth for the eurozone, expecting a 1.1% increase. This is down by 0.1 percentage point from the previous forecasts. The GDP for 2020 was also down from 1.4% previously to 1.2%. On inflation, the commission expects consumer prices to average 1.2% this year and gradually rise to 1.3% by 2021.

EUR/USD Could be Posting Further Declines

The currency pair is consolidating near the support area of 1.1075 – 1.1062. Price action is trading below this level. A strong close would confirm further declines. If this happens, the common currency will be targeting the lower support at the 1.1000 level. Given that this is a psychological level, we expect the EURUSD to stall at this support in the short term.

Bank of England Leaves Rates Unchanged

The Bank of England held its monetary policy meeting yesterday and decided to leave rates unchanged at 0.75%. The move was widely expected by the markets. However, the surprise was that there were two dissenting votes in favor of a rate hike. The BoE said that recent developments have reduced the risk of a no-deal Brexit and they expect growth to gradually rise.

GBP/USD Falls Below Support

The currency pair fell after the BoE's report, slipping below the support level of 1.2856. This comes after the currency pair was consolidating near the support area. However, the lower high forming indicates that the bias is to the downside. The minor support at 1.2810 will be key in the near term. A break down below this level will open the way for GBPUSD to slide towards 1.2582.

Gold Prices Slip on Renewed Trade Optimism

The precious metal was back on the decline losing over one percent on the day. The declines come on renewed trade optimism between the US and China. Sentiment for risk assets increases following the new developments on the trade front. The declines in gold prices come after the precious metal has been failing to post further gains.

XAU/USD is Seen Testing the Support

The declines in XAUUSD saw price action falling to the support area of 1462. The support area marks prices testing this level for the second time in recent weeks. Overall, XAUUSD is trading sideways within the levels of 1511 and 1462. A breakdown below the 1462 support level will potentially confirm further declines to 1440.

Author

John Benjamin

Orbex

John is a market analyst for Orbex Ltd. and is a forex and equities trader having been involved in trading since late 2009. John makes use of a mix of technical and fundamental analysis and inter-market relationships.

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