Global bourses edged higher on Wednesday following developments on the U.S.-China trade front with a fresh round of negotiations between the two due to begin next week. As a gesture of goodwill, China has already started buying US Soybeans and is now waiting for the US to do their part and lift the ban on Huawei. The US/China positive headway has given the USD a lift with the greenback now dominating the markets. Elsewhere, expectations ECB could cut rates before the Fed kept the EUR subdued and pushed major EU indices slightly higher this morning.
Boris Keeps GBP Subdued
Boris Johnson was elected as the new UK PM and made it clear that he seeks to exit the EU on October 31st. Everyone is now waiting for him to announce his cabinet members later today. Boris’ cabinet is expected to be manned by Brexit hardliners, which could result in a standoff in Parliament and may even trigger new elections. Unsurprisingly, Boris’ election win kept the GBP subdued.
Forex Preview: USD Dominates
The USD is the king in the ring presently; looking at the USD index we are at an important resistance level and the USD may turn lower again from here if the break does not happen soon. Watch for PMIs out of the US this afternoon for further input on the US economy and future USD direction. Meanwhile, the EUR/USD dropped lower deep into the 1.11's ahead of tomorrow's ECB pricing in a dovish ECB meeting with an overdelivering Draghi in his very last press conference. Watch for today's EZ PMIs which could help or drag the EUR noticeably lower. Elsewhere, the kiwi (NZD) experienced a panic selling which may not be over just yet, after the RBNZ hinted it may want to do something like an own QE. The AUD also edged lower against its rivals as the RBA seems to have run out of easing options and as other central banks prepare to slash rates.
Oil Prices Edge Higher
Elsewhere, oil prices edged higher, extending gains as rising tensions with Iran fuelled concerns about supply disruptions and as a very big draw in the API's last night boosted demand. Market participants will now be looking to the crude oil stocks later this afternoon for direction.
Gold Steady, BTC Drops
Spot gold (XAU/USD) sold a bit on the strong USD but still holding quite high and looks like it is just waiting for a new chance to climb back up. Escalating tensions in the Middle East could drive more buying interest towards the safe-haven metal, while a stronger dollar will continue to cap the dollar-denominated bullion’s gains. Elsewhere, BTC dropped below the 10k level and also is trading below the Ichimoku cloud on a daily level for the first time in months which is another bearish sign. What could help BTC is if the present low remains higher than the recent one and the market goes back up to re-test 11k levels.
Recommended Content
Editors’ Picks
AUD/USD: Extra gains in the pipeline above 0.6520
AUD/USD partially reversed Tuesday’s strong pullback and regained the 0.6500 barrier and beyond in response to the sharp post-FOMC pullback in the Greenback on Wednesday.
EUR/USD meets support around 1.0650
EUR/USD managed to surpass the key 1.0700 barrier in response to the intense retracement in the US Dollar in the wake of the Fed’s interest rate decision and Chair Powell’s press conference.
Gold surpasses $2,300 as Dollar tumbles
The precious metal maintains its constructive stance and trespasses the $2,300 region on Wednesday after the Federal Reserve left its FFTR intact, matching market expectations.
Bitcoin price reclaims $59K as Fed leaves rates unchanged
The market was at the edge of its seat on Wednesday to see whether the US Federal Reserve (Fed) would cut interest rates during the Federal Open Market Committee (FOMC) meeting.
The market welcomes the Fed's statement
The market has welcomed the Fed statement, and the S&P 500 is higher in its aftermath, the dollar is lower and Treasury yields are falling. There is still only one cut priced in by the Fed.