US Fed Rate Hike, Oil and Post US-North Korean Jingles

 One of the most exciting yet volatile trading days ahead as market participants move their focus from the US –North Korea Summit to other triggers. Crude Oil prices fell 0.59% ahead of Wednesday’s Crude Oil Inventories report by the EIA, Energy Information Administration.
 The Report is expected to reveal an increase in Oil inventory levels. Coupled with the fact that, the USD is in high demand, in anticipation of today’s Fed rate decision at 15:30 GMT. USD/JPY was up 0.31% by 08:26 GMT swinging between 110.31 – 110.71
Oil prices remain battered into selloff mode. On Tuesday API American Petroleum Institute gave a dismal outlook for oil citing a surge of 830,000 barrels rise which has been brought on by US Overproduction. The EIA, Energy Information Administration also reported on Wednesday, a possible drop of about 30% in Iranian and Venezuelan oil production, however with Saudi Arabia, increasing its production cap, OPEC noted a 50,000 barrel surplus, bring daily supply just above 31million barrels a day to offset drastic production cuts from Venezuela and Nigeria.
Gold prices also felt the crunch trending between 1,297.00 – 1,299.80 and shedding -0.15% further downside movement in view as with most all commodities, including Silver, Copper, Natural Gas, and Cotton.
 The EUR is unstable on the one hand its low value is attracting buyers and on the other hand Bank policies to curb the asset purchasing program has adverse effects. EUR/USD was 0.28% up ranging from 1.1730 – 1.1809. The Euro group meeting set for the day may reveal more details.
Asian shares dwindle as more investors eye the Fed rate decision, this downward trend is likely to impact the EU share negatively into a short-term downtrend.
GBP remains bearish ahead of a deluge of economic reports from the UK. -Which is likely to leave the GBP in cold waters. GBP/USD was ranging between 1.3312 – 1.3376 with a -0.40% drop.
 Meanwhile, Cryptocurrencies also recede into a bearish trade.

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Market Deciphers US-North Korean Summit.

Markets are deciphering the effects of the Historic US-North Korean summit, which ended with a cordial comprehensive agreement. Details are still murky, yet with positive undertones. In which President Trump retraits that North Korea will keep its promise and the US shall cease all War rhetoric

  • The USD continues to maintain dominance against all six Major currencies USD/JPY has been trending between 109.97 – 110.49 as investors gained more confidence from the results of the meeting. However, upside may be challenging due to the full price mode in anticipation of the Fed rate hike on Wednesday.
  • EUR/USD, lost some grounds in classical inverse correlation as the USD gained more traction. However, EUR remains supported by upcoming ECB rate decision on Thursday. Trading between 1.1741 – 1.1809.
  • Commodities also plummeted, except Oil, which is surging ahead of today’s API/ American Petroleum Institute Report, upon the release some analyst expect prices to fall on increased US production activities, meanwhile Crude Oil could be found between 66.03 – 66.58 at 7-days’ highs. Meanwhile Aluminum remains on demand sparked in part by the US Trade Tariffs.
  • Gold remains stuck in a range bound trajectory of 1,300.40 – 1,304.80 driven by geopolitical sentiment downside undertones may abound.
  • Asia is in a very positive mood with all indices and futures bullish taking the meeting between North Korean Leader and President Trump as welcoming for the future corporation. Global stocks are high
  • Cryptocurrencies are reversing recent losses. BTC/USD was up 0.81% ranging between 6,636.7 – 6,899.0. Volatility is to be expected as BTC remains below the 7k handle meanwhile the UK’s Financial Authority steps into advice Bank CEO’s on how to handle issues surrounding the cryptocurrencies
  • With Asia Up, EU is seen following up, with Germany30, up 0.011 % Uk’s 100, France’s CAC40 Italy 40, were all seen attempting to tack on gains however bearish by 09:05 GMT.

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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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