Trade truce paints illusion of market stability

2 July, 2019

Some semblance of stability returned to financial markets yesterday as investors breathed a collective sigh of relief after US-China trade talks during the G20 summit ended on a positive note over the weekend.

Global sentiment brightened with “risk-on” making a return after the United States and China agreed to restart trade negotiations. A sense of optimism over both sides finding a middle ground on trade is likely to distract market players away from geopolitical risk factors. However, given how the implemented tariffs are denting global growth and still remain unresolved – nothing much has changed. With the underlying factors weighing on investor confidence still in play, this illusion of market stability may be tested as the second half of 2019 gets under way.

Dollar cheers US-China trade truce


The Dollar’s aggressive appreciation on Monday confirms that the currency remains extremely sensitive and reactive to speculation around a potential US interest rate cut this year.

A trade truce between the United States and China is positive for global sentiment and removes some element of uncertainty over trade. The Federal Reserve is unlikely to pull the rate cut trigger as tensions ease between the two largest economies and this hesitance is good for King Dollar.

Looking at the technical picture, the Dollar Index is trading marginally above 96.70 as of writing. The upside momentum is likely to send prices towards 97.00 in the near term. Should market expectations continue cooling over the Fed cutting interest rates, the Dollar Index has the potential to blast through 97.00.

Reserve Bank of Australia cuts rates to historic low


The drum beat of central banks showing a willingness to ease monetary policy beat louder this morning after the Reserve Bank of Australia (RBA) cut interest rates to a fresh record low of 1% - down from 1.25% last month.

This means that in the span of four weeks, interest rates in Australia have decreased from 1.5% to 1.0%. Should the rate cuts fail to revive household spending and stimulate economic growth, the RBA could pull the trigger once again this year.

In regards to the technical picture, the AUDUSD pushed higher despite the rate cut with prices trading around 0.6980. An intraday breakout above 0.7000 could open the doors towards 0.7030.


Source  
Stock gains could be temporary25 Sep, 2020  

Asian stocks and currencies are enjoying some relief before the end the trading week, taking their cues from Wall Street’s advances on Thursday. US and European...

Quarterly Witching: Dark spell ahead?18 Sep, 2020  

Asian stocks are edging higher, with the MSCI Asia Pacific index set to register its first weekly gain this month. However, the selloff in US stocks is set to stretch on...

US stocks: More bumps ahead?11 Sep, 2020  

Asians stocks are putting in a mixed shift after Wall Street was unable to sustain its mid-week rebound. Investors are also mulling the prospects of another...


US futures fluctuate following tech bounce10 Sep, 2020  

After entering correction territory on Tuesday with an 11% decline from the highs, the Nasdaq 100 rebounded strongly on Wednesday rising 3%...

Can tech stocks stop the rot?4 Sep, 2020  

US stocks are set to fall further on Friday, with futures now in the red, led once more by tech stocks. The Nasdaq Composite Index saw a 4.96 percent plunge on Thursday...

Powell could jolt Dollar, Gold26 Aug, 2020  

While the S&P 500 and Nasdaq have been busying themselves with new record highs, the Dollar index (DXY) and Gold have kept their heads down and laid low over recent sessions.


Twin storms could lift Oil prices higher24 Aug, 2020  

Crude Oil is holding steady around the $42.50 per barrel line, even as back-to-back storms threaten to crimp US Oil production in the Gulf of Mexico...

Time for GBPUSD to challenge 1.3200?18 Aug, 2020  

Our currency spotlight this week shines on the British Pound which has woken up on the right side of the bed this morning! Investor sentiment towards the currency...

It's time for fiscal policymakers to deliver30 Jul, 2020  

The Fed's Chairman, Jerome Powell, did a credible job on Wednesday of keeping monetary policy unchanged, while still managing to meet markets expectations...