Tariff Concessions, Stable Jobless Claims, BOE nearer to easing, Oil rallies, Gold struggles

What trade promise fatigue?  Financial markets remain determined to climb higher as global equities were boosted after China’s Commerce Ministry spokesman Gao Feng noted that both sides had agreed to simultaneously cancel some existing tariffs on one another’s goods.  Optimism is sky high for this phase-one trade deal as the yuan is back below the 7 level and as US stocks that are impacted by Chinese trade are back near the highs that we saw back in May. 

A phase-one trade deal is almost fully priced in, though the timing could end up taking us deeper into December as the finer details will likely be hard to come by.  US stocks will resume their bullish breakout if the US economy continues to shine.  US weekly jobless claims once again came in better than expected with 211,000 first-time claims for state unemployment benefits, slightly better than the forecast of 215,000 and still showing no major impact from the GM strike.  Equities will continue to rise if we see a strong US consumer and so far a strong labor market is paving the way. 



The British pound fell after the BOE signaled they are more worried about Brexit and the global economy.  BOE Governor Carney noted risks to the UK outlook are skewed to the downside.  The vote to keep policy unchanged was expected to be unanimous, but Saunders and Haskel voted for a 25 basis-point cut.  Money markets raised the odds that the BOE will deliver a rate cut next year.  No change is widely expected for a rate cut at the December meeting, but the January 30th meeting sees a one in three chance. 

The heavily anticipated monetary reports showed the BOE is expecting an orderly Brexit transition to a deep free trade agreement over a shorter horizon.  Economic growth forecasts for 2020 and 2021 were cut to 1.2% and 1.8% respectively. 

The FTSE 100 is higher by 0.4% with mid-sized companies outperforming their small and large peers. 



Oil prices have recovered most of yesterday’s decline following the optimistic trade comments from China’s Commerce Ministry.  While the overall risk-on mood of the market is taking oil higher this morning, gains could be capped as oil markets are still repricing in slightly pessimistic expectations for the upcoming December OPEC + meetings.  Prior to this week, energy traders were starting to price in the possibility of deeper production cuts.  This week, comments from Russian Energy Minister Novak noted that market is rather well balance and that a Brent price of more than $60 showed the situation is stable. 

West Texas Intermediate is currently testing some key technical levels and even if we see one last push higher, sellers are likely to defend the $60 a barrel level. 



Gold is in danger of breaking below its key recent range as trade optimism continues to drive a global risk-on rally move that is driving both global bond yields and the major indexes sharply higher.  Gold’s longer-term bullish outlook should still be reassert itself, but that might not happen until we see a major selloff that targets the $1,450 an ounce level.  Central bank buying provided underlying support for gold during the 2018-2019 bull run, but with the news the PBOC is taking a break in purchasing the yellow metal, we could some extended softness in the short-term.

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: Bearish hammer on D1 ahead of ECB minutes

EUR/USD is looking heavy ahead of the minutes of the ECB Oct policy meeting, which are expected to show the members stand divided on which course to take. Waning trade optimism will likely keep the EUR on the defensive.


GBP/USD turns positive above 21-DMA as challenges to Tories recede

With the Tory supporters paying little heed to the previous day’s ITV debate, not to forget a surprise turnaround in the opposition Labour party loyalists, GBP/USD trades  better bid above 1.2900 while heading into the London open on Thu.


USD/JPY bounces-off 50-DMA but lacks follow-through

USD/JPY has bounced up from the 50-day MA support of 108.28. China's Vice Premier Liu He is cautiously optimistic about the prospects of the US-China trade deal. Related markets, however, are not buying Liu He's optimism, keeping the recovery in check. 


US Dollar Index recedes from tops, back below 98.00

The greenback, when tracked by the US Dollar Index (DXY), is struggling for direction in the proximity of 97.90 on Thursday. FOMC minutes stressed the Fed’s ‘wait-and-see’ stance. Philly Fed index, Claims, Fedspeak next on the docket.

US Dollar Index News

Gold: Doji on D1 questions bulls amid mixed trade sentiment

Although the United States’ (US) support for Hong Kong protesters favors the broad risk-off momentum, the mixed response from Chinese diplomats and a bearish candlestick formation question Gold buyers around $1,473 during early Thursday.

Gold News

Forex Majors