By Deepta Bolaky
Trade optimism was the main driver of the markets. Phase 1 of a trade deal may not address bigger technology issues but might be enough to de-escalate the economically damaging trade war. There were also headlines that the US is reportedly considering removing the latest round of tariffs on China.
Wall Street eked small gains and helped US equities to hover near record highs on Tuesday. The rally in the US equity benchmarks has paced down.
In the FX market, major currencies were weaker against the US dollar. The performance of the greenback was mixed at the start of the US session, but the dollar strengthened by the end of the trading day.
The Aussie dollar emerged as the best performing G10 currencies against the US dollar. The Antipodean was on a rally throughout the Asian session buoyed by the RBA’s comments. As widely expected, the RBA left the interest rate unchanged at 0.75% but the central bank struck a hawkish outlook:
“After a soft patch in the second half of last year, a gentle turning point appears to have been reached.”
The AUDUSD pair climbed to a high of 0.6928 before paring some gains in the later sessions. As of writing, the pair is consolidating in a tight range at 0.6892
AUDUSD (Hourly Chart)
Source: GO MT4
The British Pound was also among the few in the positive against the US dollar. A stronger-than-expected UK services PMI at 50.0 boosted the Pound, but the election campaign and the renewed strength in the US dollar have capped gains. The GBPUSD pair is currently trading at 1.2883 after rising above the 1.29 level.
Oil prices traded higher despite bearish API data. The American Petroleum Institute reported a rise of 4.3million barrels in US crude stocks compared to an increase of only 0.592 million barrels in the last report.
Trade optimism was the main driver of oil prices. As of writing, WTI and Brent Crude were trading in the vicinity of $57 and 62 respectively.
UKOUSD and USOUSD (Hourly Chart)
Source: GO MT4
Trade hopes weighed on safe-haven assets. The yellow metal dropped below the key psychological level of $1,500 dragged by trade-related headlines and the renewed strength in the US dollar. As of writing, the XAUUSD pair has consolidated in the $1,484 region. Investors will eye trade headlines and Fed speeches for fresh trading opportunities.
XAUUSD (Hourly Chart)
Source: GO MT4
Key upcoming events
BoJ Monetary Policy Meeting Minutes, Jibun Bank Services PMI, and 10-yr Bond Auction (Japan)
Factory Orders, Industrial Output, and Markit Services & PMI Composite (Germany)
Markit Services & PMI Composite, ECB Speeches, and Retail Sales (Eurozone)
Fed Speeches, Nonfarm Productivity, and Unit Labour Costs (US)
Ivey Purchasing Managers Index (Canada)
AiG Performance of Construction Index (Australia)
|Thursday, 07 November 2019|
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