Markets turned higher on Friday morning as positive signals emerged from trade negotiations between the US and China. Specifically, U.S. President Donald Trump characterized the first-day discussions as “very, very good” and plans to meet with Chinese Vice Premier Liu He at the White House later today. Celebrations of a breakthrough also extended to the Brexit front with the GBP spiking 2% higher on Thursday on hopes of a fruitful meeting between British and Irish leaders over Brexit. Both the UK and Irish PM stated in a joint statement that "they could see a pathway to a possible deal" and any further news down that direction is likely to help the GBP push even higher especially as we continue to see the USD taking a break from further strength.
US/China to Reach Partial Deal?
In the U.S., anticipation for a partial deal solidified after Trump stated that the talks went very well and that his meeting with China's VP Liu He today further supported the positive tone. Also, news of the potential currency pact continued to make their rounds, which if true would mean the USD is likely to turn lower again in the mid-term picture, so it is crucial to watch these developments as they unfold to take advantage of these market-moving shifts.
Turkish Escalates Campaign in Syria
Turkey’s attacks in northeastern Syria continued for a second day, killing Kurdish fighters and seizing 11 towns. Trump stated there are only 3 ways to respond to this 1) take military action which he doesn't seem to want to do 2) hit Turkey financially and with sanctions which the US is proceeding with and 3) mediate a deal between Turkey and the Kurds, which probably still has a long way to go. As a result, the TRY sell-off cooled down a bit but could easily re-ignite on further stress.
Forex Preview: GBP Higher on Newfound Brexit Optimism
The dollar lost some steam and was last seen trading lower given the return of the risk-on mood and in anticipation of the currency pact. We should keep in mind however that the FED is extending its balance sheet again and is likely to cut rates another time on its next meeting which favours the view that the USD has more outlook for weakness at the moment. Elsewhere, the EUR broke out to the upside but is still stuck at the 38-day MA which it needs to surpass so as not to fall back from here. The GBP was the winner of the day yesterday and could possibly continue to edge higher today if the Brexit breakthrough continues to become reality.
Oil Prices Higher, Gold Subdued
Oil prices climbed on Friday, building on gains in the previous session after producer club OPEC hinted at making deeper cuts in supply. What is more, 3% of the global oil tanker fleet was taken out of the market, as companies feared violating U.S. sanctions against Iran and Venezuela. Elsewhere, gold prices dipped but remained still very close to the $1,500 which remains an alarm bell to me, not to be ignored. Why is nobody selling gold if everything is looking good? Some analysts say regardless of any deal, the damage is already done and a recession is coming, could that be the reason?
BTC Wobbles
BTC first traded higher this morning on around 7k BTC short liquidations on Bitmex which quickly were followed by 9,8k BTC long liquidations on Bitmex that ultimately shows how volatile and undecided this market presently is.
Recommended Content
Editors’ Picks
EUR/USD clings to daily gains above 1.0650
EUR/USD gained traction and turned positive on the day above 1.0650. The improvement seen in risk mood following the earlier flight to safety weighs on the US Dollar ahead of the weekend and helps the pair push higher.
GBP/USD recovers toward 1.2450 after UK Retail Sales data
GBP/USD reversed its direction and advanced to the 1.2450 area after touching a fresh multi-month low below 1.2400 in the Asian session. The positive shift seen in risk mood on easing fears over a deepening Iran-Israel conflict supports the pair.
Gold holds steady at around $2,380 following earlier spike
Gold stabilized near $2,380 after spiking above $2,400 with the immediate reaction to reports of Israel striking Iran. Meanwhile, the pullback seen in the US Treasury bond yields helps XAU/USD hold its ground.
Bitcoin Weekly Forecast: BTC post-halving rally could be partially priced in Premium
Bitcoin price shows no signs of directional bias while it holds above $60,000. The fourth BTC halving is partially priced in, according to Deutsche Bank’s research.
Week ahead – US GDP and BoJ decision on top of next week’s agenda
US GDP, core PCE and PMIs the next tests for the Dollar. Investors await BoJ for guidance about next rate hike. EU and UK PMIs, as well as Australian CPIs also on tap.