Tuesday equity session was a volatile one and ended deep in the red. Technical analytics inform that it was the first serious US sale-off this year. Equities were affected by economic growth concerns, and eventually denied reports that the US turned down an offer by two Chinese officials to attend preparatory trade talks in the US. We see no reason for panic so far and believe that Tuesday’s sale-off was a late market reaction to increased risks. While US SP 500 is trading above 2600 points, the market maintains a relatively positive outlook. So what triggered the sale-off? Hope of stimulating measures in China to boost growth faced the concerns on the progress of negotiations between Washington and Beijing. The second driver won the day.
Today, after Tuesday’s sales, there are favorable technical conditions for market recovery. European stocks are trading higher, futures for US indices are also in the green. US government shutdown currently lasts for almost 33 days. Today there were reports that US Senate would have to vote on two separate bills on Thursday, which could potentially put an end to the longest American “shutdown”.
In the FOREX market, relatively calm trading session complements current trading week. US dollar index is still close to the strategic level around 96 points. The last two daily candles formed a kind of reversal pattern; let's see how USD trading day will be closed today.
USD / JPY moved to the growth after two days of decline due to Japanese regulator meeting. The most important thing to note is that the Bank of Japan lowered its inflation forecasts, Japan recorded the first annual trade deficit in three years, as the cost of energy imports rose. Otherwise, the meeting of the Japanese regulator did not bring any surprises; however, the mentioned changes were enough for the USD / JPY market to strengthen to two-week highs.
British pound continues to gain despite the uncertainty with the Brexit plan. Today GBP/USD is traded around 1.3040 zone. This is an interesting development and a strong bid for continued growth.
The daily trading range for EUR / USD market today achieved a kind of anti-record. The daily range for EUR / USD was only 20 points. Intraday the pair is trading inside 1.1350-1.1370. It is clear that in such conditions we can’t talk on any changes in the market.
In the commodity markets, after yesterday's losses, Brent moved to a positive territory due to the improved risk sentiment. API data was postponed due to the US holiday on Monday. Shortly before the start of the US trading session, Brent oil is trading around 61.87 levels.
Yesterday, gold was able to gain slight benefits from equities sentiment. However, already today, the first tactical resistance level became a problem for gold - the mark of 1285 turned out to be a serious obstacle, which confirms that buyers are losing control over this market. However, the strong line of bull defense is located in the area of 1277, where the current impulse formed.
Today there are practically no important statistics in the US, players will focus on news regarding US and China trade talks, and US corporate reporting data. Reporting focus include Proctor & Gamble and Ford.
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