News

Planned Trade Talks Bolster Risk Sentiment

Equities

Major US stock index futures cheered the announcement of new trade talks between China and the United States next month. The trade disputes between the world's largest economies weighed on the stock market and raised investors' concerns over the global economic outlook. A phone call between China's Vice Premier Liu He, U.S. Treasury Secretary Steven Mnuchin, and the U.S. Trade Representative Robert Lighthizer helped to bring back the trade talks table in early October, and restore investors' risk appetite. The Dow Jones Industrial Average futures climbed to a five-week high of 26687, the S&P500 futures rallied to 2970, and the Nasdaq futures advanced to 7839.

USD

The dollar index which measures the greenback against a basket of major currencies settled lower for the second consecutive day at 98.40. The buck took a hit on Tuesday as the ISM Manufacturing PMI dropped to its lowest levels in more than three years, to signal a slowdown in the manufacturing sector. Market participants are looking forward to a series of economic indicators coming out these two days to grasp further hints about the economic performance, and how the Fed would react. On the other hand, the better-than-expected Services PMI coming out from the Eurozone bolstered the demand for the single currency, and the Pound earned massive support as the British parliament voted to avoid a "no-deal" Brexit. The EURUSD edged higher to $1.1039, and the GBPUSD raced higher to $1.2260.

CAD

The Canadian dollar soared following the Bank of Canada interest rate decision. The bank left interest rates unchanged at 1.75% and announced that the current monetary policy stimulus remains appropriate, which sounded less dovish. The USDCAD tumbled to a four-week low of 1.3206, and the EURCAD plunged to a two-year low of 1.4554.

Metals

Gold prices reversed from a fresh-six year high of $1556 as China and the United States announced a new round of trade talks. Lately, the trade disputes between China and the United States and the expected consequences on the global economic outlook supported the flow of money to safe-haven assets like gold. However, the recent development enhanced investors' risk sentiment, and they were seen fleeing safety. The price of a gold ounce is currently hovering around $1550, and the price of a silver ounce is trading at $19.50.

Oil

Oil prices edged higher on improved risk sentiment. The recent trade developments and the monetary policy easing prospects by major central banks eased investors’ woes over the global economic outlook. The West Texas Intermediate crude oil futures rose to $56.63, and the Brent futures rallied to $61.14. Market participants are looking forward to the weekly oil report by the US Energy Information Administration later today as the American Petroleum Institute reported last night a buildup of 0.401 million barrels in US oil stock during the past week.

Major Economic Events

GMT Country Event Expectation Previous

12:15

US

ADP Nonfarm Employment Change (Aug)

148

156

12:30

US

Initial Jobless Claims

215

215

14:00

US

ISM Non-Manufacturing PMI (Aug)

54.0

53.7

14:00

US

Factory Orders (MoM) (Jul)

1.0%

0.6%

15:00

US

Crude Oil Inventories

-2.488

-10.027


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