Market gears up ahead of Trump-Kim summit.

This week is teaming up with several Market triggers, starting from US-North Korean summit, the FOMC Rate Hike, ECB interest rate decision and several economic reports on tap. Market participants seem unperturbed, trading on market sentiment while jumping from “riskier” assets to less “risky” and vice versa as they see fit.

The G-7 summit over the weekend did not yield any meaningful results. The US President stayed his ground and proposed that Russia is invited back to join the group to become G-8. Following its ban from the group due to its aggression against Ukraine.

The tariffs imposed by the US on its allies were not altered. Its likely that other countries, may want to impose counter tariffs on the US. Investors jumped on the US Yields strengthen the USD.
The CAD was pushed down with most of the metal commodities like Silver, Copper, and Oil as the USD gains ahead of the much-anticipated FOMC rate hike on Wednesday.

GBP has also been surging ahead of the economic reports set for the day, such as UK’s Manufacturing Production, Trade Balance, etc. Forecasts were positive for the GBP in early European trading hours. However, upside may be capped. Some Analysts believe the projections are inflamed, with Br-exit still weighing. Thus downside movement is eminent as per the Speculative Sentiment Index SSI

EUR has been rising as investors look to the upcoming ECB meetings. EUR/USD was ranging between 1.1771 – 1.1820 the Uptick seems to have been helped by the New Italian Minister who amongst other things promises to keep Italy in the EU. Naturally, calmed investors who were considering a possible “Itexit” Italian Exit.
Oil dipped as demand for China Oil decreased amid US overproduction. The Baker Hughes Report on Friday showed an increase of only one rig from 861 to 862, but enough to keep prices down ranging 65.32 – 65.74

 Asian markets have been on the positive side with North Korea & Us summit on tap. EU shares have been blossoming Monday morning.
 Gold has been oscillating between gains and losses 1,299.30 – 1,305.40 however pressured down with USD high.

Cryptocurrencies suffer from sell-offs amid hacks and regulatory policies. The
US Commodity Futures Trading Commission (CFTC) launched a probe into four major crypto exchanges. Causing significant sell-off in all 100 cryptocurrencies since Sunday.

 

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G-7 Summit weighs on Market sentiment.

  • With the G7 summit set for today and Saturday in Charlevoix Quebec uncertainties are abound, triggering risk-off mode coupled with Friday’s profit-taking.
  • The US Yields dropped pulling with it the USD from 3-week highs.
  • Meanwhile, Asia shares shrugged on the ECB’s possible decision to cut back it Quantitative Ease policy of Assets purchasing and trade war uncertainties. EU Shares are taking notes from Asia, thus pinned down Germany 30, Italy 40, France 40 and UK’s 100 are all in the negative.
  • EUR has been on the rise since Wednesday and likely to maintain that position into the weekend unless ECB member Yves Mersch triggers a selloff in her speech during the day. The EUR/USD has been trending between 1.1771 – 1.1810.
  • Commodities are down. WTI crude oil dipped after reaching 66.19 as demand in China shrunk while the US continues to ramp up production ahead of today’s Baker Hughes Rig Count. Crude oil was seen trending between 65.45 – 66.19
  • Gold lost its luster shedding 0.21% to 1300 at 07:38 GMT. However, has been swinging between 1,297.40 – 1,303.90 since late Tuesday.
  • The British Foreign secretary Boris Johnson warns of a possible Brexit meltdown before things get better GBP is likely to gain more traction today. EUR is sensitive today however market participants think the short dips are due to profit taking, with upside is expected due to market fundamentals.
  • The JPY is acting as semi-safe heaven as the JPY was not so attractive for investors after GDP reports disappointed market expectations.
  • Cryptocurrencies are also down.
  • A Very volatile Friday seen with perhaps some fireworks coming out of the G7 meetings.

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The Aussie Dollar hits a Snag!

  • AUD was hit into the bearish mode by a weaker than expected Trade Balance from April. The trade Surplus had shrunk to 977,000 AUD from 1.73 million AUD.
  • Meanwhile, Asian shares rose to almost 2-month highs.
  • EUR surged on Chief Economist of ECB Peter Praet’s comments yesterday indicating that the European Central Bank may be gearing up for a gradual wind down on its asset purchasing program. Investors saw this as an opportunity to take advantage of the low value of the EUR by buying into it.
  • GBP/USD up 0.37% to 1.3465.
  • Oil prices began to surge in an attempt to erase previous loses brought on by oversupply activities. Since Venezuela is facing challenges in exporting its 24 million barrels of oil, Market participants jumped to this as positive for oil prices as supply is disrupted, overshadowing the EIA/Energy Information Administration report of over 2million barrels built in crude oil inventories. WTI was seen zigzagging between 64.84 -65.24
  • Gold Prices are pressured, on one-hand, the USD slipped giving the illusion that it is weak, thus prompting investors to try to take advantage. However, the dip in the USD could be very short-lived ahead of today’s deluge of US economic data release on Initial Jobless claims.
  • Cryptocurrencies are mixed with BTC/USD, XRP/USD among the gainers. Perhaps the rest will follow with moderate gains.

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Everyone wants a Piece of the Pie.

  •  US Yields rose Wednesday morning; Asian shares were relatively positive boosted by the tech industry. These chain of causation is likely going to support EU shares in a positive way.
  •  As USD maintained its bullish stance the expectation is commodities and other majors are to be on a downward trajectory as in a classic inverse correlation scenario, however, commodities like Gold, Aluminium, Silver, and Oil are all bullish. perhaps until reports from the U.S are delivered.
  •  Oil prices rose Wednesday ahead of the usual Crude Oil Inventories Report, provided by the EIA / Energy Information Administration, although some analysts claim the U.S. has asked some OPEC members to increase production. Venezuelan’s efforts to curb exports have encouraged prices up to be ranging between 65.44 – 65.97 with a 0.26% rise by07:54GMT
  •  GOLD is trending between 1,300.40 – 1,303.50
  •  Meanwhile, EUR/USD climbs 0.34% from recent 10month lows of 1.1510 to 1.1758. at two weeks highs and may remain hawkish as investors digest upcoming ECB comments. The GBP was also found bullish. USD/JPY was up 109.90 at the time of print 07:10GMT
  • Upbeat GDP has supported AUD reports 1.0% versus a forecast of 0.8%.
  • CAD & MXN have been under pressure by the USD Tariffs (Trade Wars) which is biting into the NAFTA agreement.
  •  INR releases its interest rate decision today.
  • China Steel exporters seek new markets in Africa and elsewhere.

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Market Seeks New Catalysts.

  • Following yesterday’s rally for Global markets, on several fronts. Market Participant today are eyeing other possible catalysts for market direction.
  • With Asia steady amid a trade war standoff between the US & China, European shares are taking advantage of the limelight. GERMANY 30, ITALY 40, FRANCE 40, UK100, all seem bullish oscillating between small gains and losses while long-term gains remain fragile as the Italian, and the US lead tariffs threaten the stability
  • The oil shock of its losing streak from Monday, ahead of the API/American Petroleum Institute Report which reveals the status of weekly Oil stockpiles, Oil is relatively Bullish meaning up trending. Oversupply worries could limit upside movement. By 08:16GMT Oil price had tacked on gains of 0.65% at $65.16 a barrel. Analysts see a range bound between 64.90 – 65.28 breaches beyond these thresholds will set the tone for oil direction.
  • Despite the USD’s firm stance, US yields lost steam, prompting some market participants to think it is weak. EUR, GBP, are rallying with upside movement capped, while AUD falls from yesterday’s glory.
  • Gold is also pinned down. Swing between short gains and losses.

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The Trumpnomic Effect & Wall street

  • Asian Shares rose Monday morning propelled by upbeat U.S. jobs growth report on Friday. The Non- Farm Payrolls reported 223,000 new jobs versus a forecast of 189,000. Volatility is highly likely, amid commotions surrounding the newly imposed US. Tariffs imposed on its “Allies” though Wall Street seems unraveled by it.
  • The USD Uptrends has pushed commodity prices down, with the most obviously seen changes in Gold prices which are ranging from 1,294.10 – 1,298.60 down 0.15 % from its previous open.
  • Oil price slumped with the Dollar up. However, the rise in Friday’s Baker Hughes Rig count by 2 more rigs from 859-861 was enough to diminish investors appetited, whom among other factor are weighing Saudi & Russian led initiatives to fill in the supply gap left by Iran and Venezuela. WTI Oil prices began tacking on some gains after dropping to $65. Analysts suggest a range bound day between 65.57 – 66.27
  • The Financial calendar today is laced with some Economic event coming in from Spain, and the EU is attracting spread betters to the EU. The EUR/USD was seen trending between 1519 – 1.1724 a 0.29 % rise by 08:00 GMT. Further upside remains capped.
  • The AUD got fresh winds climbing up against the USD, with the release of supportive data: Retail Sales rose 0.4% versus a project 0.2% Australia Company Gross Operating Profits increased by 5.9% instead of 3.0%.
  • Cryptocurrencies remain sensitive to cleanups and regulatory measures, which causes abrupt swings between gains and losses, despite the establishment interest. BTC/USD was seen heading down -1.67% between 7,548.9 – 7,770.9.
  • As Asian shares shine some of the effects could be felt within the EU shares. Germany 30, Italy 40, France’s CAC40 are all bullish. Which is likely to spill to the US.
  • Meanwhile the US. Yields surge rendering support for the USD while EUR, GBP, and AUD stage a defiant comeback on the local fundamental news. AUD rose to its 50day highs
  • Although Earnings season is cooling off there are still 23 companies reporting today which may drive the stocks of individual companies up pulling with it the NASDAQ, S&P and Dow Jones.

Elsewhere the Turkish lira slumps with ongoing strife amongst the citizens.

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