US-China talks boost Asian shares

Swissquote Bank Research Team Swissquote Bank Ltd

High-level trade talks have resumed as US President Donald Trump and Chinese President Xi Jinping had a phone call at the beginning of the month, signalling negotiations in anticipation of their upcoming meeting at the G20 at the end of this month. Chinese, Australian and Korean shares rose while Japanese shares were heading lower. The Nikkei 225 dropped by 0.20%; Hong Kong’s Hang Seng benefitted from Tencent’s Q3 results, closing +1.75% while South Korea’s Kospi index rose 0.97%. US shares dropped for the third time this week, while oil prices modestly recovered following a 12-day downtrend of -17.60% in total. The Aussie remains the strongest currency due to positive job data and a weaker dollar. AUD/USD currently trades at 0.7293 and is approaching the 0.7315 range short-term.

Stay on top of the markets with Swissquote’s News & Analysis

Pound sinks in Brexit chaos

The pound’s plunged 1.5% this morning, as uncertainty over Brexit soared. Yesterday, the UK Cabinet approved a 585-page deal drawn up with the European Union. Today, however, the UK’s Brexit Minister – Dominic Raab – resigned, saying he “cannot in good conscience support the terms proposed for our deal with the EU.” Work and Pensions Minister Esther McVey and Northern Ireland Minister Shailesh Vara also resigned this morning, and rumours abound that other ministers might step down as well.

Euphoria over a presumed deal is turning into worries that the agreement might be binned by the end of the year. Even if the EU Parliament approves the terms, the decisive vote will come to the UK Parliament in December 2018. Clearly, the GBP will remain under pressure. Starting the day at 1.30, it is headed to 1.2800 short-term.

Author

Swissquote Bank Research Team

Swissquote Bank Ltd

EUR/USD: US Dollar to remain pressured until uncertainty fog dissipates

Unimpressive European Central Bank left monetary policy unchanged for the fifth consecutive meeting. The United States first-tier employment and inflation data is scheduled for the second week of February. EUR/USD battles to remain afloat above 1.1800, sellers moving to the sidelines.

GBP/USD reclaims 1.3600 and above

GBP/USD reverses two straight days of losses, surpassing the key 1.3600 yardstick on Friday. Cable’s rebound comes as the Greenback slips away from two-week highs in response to some profit-taking mood and speculation of Fed rate cuts. In addition, hawkish comments from the BoE’s Pill are also collaborating with the quid’s improvement.

Gold: Volatility persists in commodity space

After losing more than 8% to end the previous week, Gold remained under heavy selling pressure on Monday and dropped toward $4,400. Although XAU/USD staged a decisive rebound afterward, it failed to stabilize above $5,000. The US economic calendar will feature Nonfarm Payrolls and Consumer Price Index data for January, which could influence the market pricing of the Federal Reserve’s policy outlook and impact Gold’s performance.

Week ahead: US NFP and CPI data to shake Fed cut bets, Japan election looms

US NFP and CPI data awaited after Warsh’s nomination as Fed chief. Yen traders lock gaze on Sunday’s snap election. UK and Eurozone Q4 GDP data also on the agenda. China CPI and PPI could reveal more weakness in domestic demand.

Three scenarios for Japanese Yen ahead of snap election

The latest polls point to a dominant win for the ruling bloc at the upcoming Japanese snap election. The larger Sanae Takaichi’s mandate, the more investors fear faster implementation of tax cuts and spending plans.

XRP rally extends as modest ETF inflows support recovery

Ripple is accelerating its recovery, trading above $1.36 at the time of writing on Friday, as investors adjust their positions following a turbulent week in the broader crypto market. The remittance token is up over 21% from its intraday low of $1.12.