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Markets Optimistic as US Seeks Deal with China

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USD

The United States Dollar Index is trading at the lowest levels in three weeks, as currency war is rising along with trade war. The US dollar was weak against safe heaven currencies and gold last week, but its weakness also extended to reach other major pairs in early trading. The main market mover of the USD this week, other than trade war comments, will be the fourth quarter GDP numbers that will be released on Wednesday.

EUR

The EUR / USD is back to trade around the highs of the past two weeks, as markets are shifting back to a bit of risk-on trades, after news that the US president, Donald Trump, is seeking a deal with China to avoid the effects of a trade war. The pair is trading at 1.2366 after posting a high of 1.2380.

GBP

The Pound is trading at the highs of the day, around 1.4170 as pound traders caught positivity from the Bank of England, where markets now expect a rise in interest rates in May Meeting, if inflation numbers (from CPI to Earnings) stay on track. The major economic release for this week from United Kingdom will be the GDP of the fourth quarter on Thursday.

Gold

Gold, investor’s safe heaven, was able to gain around 3% last week, to reach a high of $1350, as traders are afraid of escalation in the trade war, which will arise uncertainty in the markets. Gold is easing a bit and trading at $1344, as stock indices are gaining back some strength after talks of a deal between the United states and China to avert trade war.

Oil

Oil futures are trading at the highest level since late January, after a drop in US supplies last week, and rising tension between European Countries and Russia, and Saudi and Iran. Also the prices of oil might find more support, after China launched its first ever crude-futures contract and it is trading at 432 Yuan per barrel. The long awaited Yuan-denominated future will promote the demand of the Chinese Yuan, but may not aid China to have some control over pricing. 

The most important economic events:

  • GBP BBA Loans for House Purchase (FEB): (GMT 08:30) – Medium – Forecast (39000) – Previous (40117).
  • GBP Record of Financial Policy Committee's March Meeting: (GMT 08:30) – Medium.

Disclaimer
The prices and news mentioned in this outlook are absolutely no guarantee of future market performance and do not represent the view of ICM Capital Limited. Financial markets can move in either direction causing profits to be made or complete losses to be incurred by the trader. Each trader must decide for themselves what their risk appetite is and ensure that correct risk management procedures are in place before placing any trades.

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