Yesterday, Wall Street rebounded as global tensions appeared to subside and as ISM Non-manufacturing in the US came in very solid and added to the hopes of fruitful trade war talks which in turn increased risk appetite. We should consider however that we have had this trade war cycle repeat itself several times in the last months and I am not so sure that this is not going to be just another one of these disappointing rounds.
*image credit: Money Maven
How will the Fed React to U.S. Data?
What is more, the somewhat good economic data out the US should also reduce the chances of an aggressively dovish stance by the Fed in its next meeting and traders should listen to Jay Powell's speech later this evening. Of course, today's NFP results out of the US are another key aspect in regards to that development.
EU Markets Subdued on Brexit Woes
In Europe, markets started the day mostly flat on Friday morning, with risk markets still holding on to their previous gains but risk appetite appears to be muted for Europe as investors continue to monitor Brexit uncertainty. With a bill stopping a no-deal exit from the E.U. on its way to becoming law, the British Parliament will pivot to the next big question: general elections.
The important thing to keep in mind, for now, is that everything is currently pointing to yet another Brexit extension which could lead to a “sell the fact” kind of reaction in the Pound, as kicking the can down the road is not quite solving anything.
Forex Preview: AUD & NZD Continue to Gain
The Australian dollar and its New Zealand counterpart continued to gain on robust oil prices and the prospect of a resolution to the two-year-long US/China trade war. The USD is trading further lower on risk-on, yet the positive economic data is likely to keep the Fed on its course of not giving in to further easing which would help support the USD back up. The EUR was not able to hold on to its gains yesterday, also the catastrophic factory order numbers out of Germany yesterday and this morning’s disappointing industrial production on top continue to show the state of the economy in the EU and the likelihood of a dovish ECB is somewhat increased; all of which give the EUR a weaker outlook in my opinion. Meanwhile, the GBP lost more ground today amid fresh Brexit uncertainty.
Oil Prices Slip, Gold Tumbles, BTC
Oil prices failed to make a meaningful break to the upside despite a sharp drawdown in U.S. inventories, possibly because oil traders are more realistic about the impact of the trade war cycle than other markets seem to be. Gold prices dipped on newfound risk appetite and currently, XAU/USD needs to hold the August support to not see more downside in the near term. Elsewhere, BTC is trying to push through the 10.7k mark, which is necessary to break out of the current range and bring more bulls to the table.
Watch the video here:
*image credit: Money Maven
How will the Fed React to U.S. Data?
What is more, the somewhat good economic data out the US should also reduce the chances of an aggressively dovish stance by the Fed in its next meeting and traders should listen to Jay Powell's speech later this evening. Of course, today's NFP results out of the US are another key aspect in regards to that development.
EU Markets Subdued on Brexit Woes
In Europe, markets started the day mostly flat on Friday morning, with risk markets still holding on to their previous gains but risk appetite appears to be muted for Europe as investors continue to monitor Brexit uncertainty. With a bill stopping a no-deal exit from the E.U. on its way to becoming law, the British Parliament will pivot to the next big question: general elections.
The important thing to keep in mind, for now, is that everything is currently pointing to yet another Brexit extension which could lead to a “sell the fact” kind of reaction in the Pound, as kicking the can down the road is not quite solving anything.
Forex Preview: AUD & NZD Continue to Gain
The Australian dollar and its New Zealand counterpart continued to gain on robust oil prices and the prospect of a resolution to the two-year-long US/China trade war. The USD is trading further lower on risk-on, yet the positive economic data is likely to keep the Fed on its course of not giving in to further easing which would help support the USD back up. The EUR was not able to hold on to its gains yesterday, also the catastrophic factory order numbers out of Germany yesterday and this morning’s disappointing industrial production on top continue to show the state of the economy in the EU and the likelihood of a dovish ECB is somewhat increased; all of which give the EUR a weaker outlook in my opinion. Meanwhile, the GBP lost more ground today amid fresh Brexit uncertainty.
Oil Prices Slip, Gold Tumbles, BTC
Oil prices failed to make a meaningful break to the upside despite a sharp drawdown in U.S. inventories, possibly because oil traders are more realistic about the impact of the trade war cycle than other markets seem to be. Gold prices dipped on newfound risk appetite and currently, XAU/USD needs to hold the August support to not see more downside in the near term. Elsewhere, BTC is trying to push through the 10.7k mark, which is necessary to break out of the current range and bring more bulls to the table.
Watch the video here: