Risk appetite returned on Thursday after China said that it was willing to resolve the trade disputes. The comments came from the Ministry of Commerce. The US and China trade dispute escalated early on after the US levied additional tariffs on China. The move threatened to derail the trade talks.
Italy Avoids Fresh Elections
The Italian government got together with the anti-establishment 5-Star movement and the Democratic party, forming a coalition. The two parties agreed to form a new government, staving off fresh elections. The move also curbs the far-right Matteo Salvini from becoming the Prime Minister.
The euro, however, brushed aside the data and remained weak on the day. The common currency is extending declines for the fourth consecutive session. Meanwhile, data from Germany showed that consumer prices slowed in August from the month before.
EURUSD Breaks Past Support Level
The EURUSD currency pair continued the declines on Thursday. This came after price action fell below the support area of 1.1065. The declines could push the currency pair down to 1.1030. This marks a confluence of the horizontal support and the trend line as well. The upside is likely to be limited, with 1.1065 turning to resistance.
Sterling Consolidates No-Deal Brexit Developments
The pound sterling was muted on Thursday after falling to a one-week low earlier in the week. Lack of fresh developments on the Brexit deadlock saw investors on the sidelines.
With the Queen now approving the suspension of Parliament, the prospects of a no-deal Brexit has increased. Still, many believe that a deal could be agreed closer to the deadline. Economic data today will focus on net lending and mortgage approvals data due later in the day.
GBPUSD Back to Support Area
The GBPUSD currency pair extended declines back to the support area of 1.2170. Price action is likely to retest this level more firmly in the near term. However, in the event that GBPUSD breaks down below this support, the upside bias will lose the validity. To the upside, the resistance area at 1.2511 – 1.2533 will be the next target in the medium term.
Gold holds Steady Near Six-Year High
The precious metal was weaker on Thursday but is still hovering near a six-year high. Price has remained fairly flat over the past few days. Gold investors await further cues from the trade narrative which has subsided for the moment. With the markets expecting to hear the Fed and the ECB layout the policy guidelines for the next quarter, gold is likely to hold flat at the current levels.
XAUUSD Bias to the Upside Builds Up
The precious metal extended declines on Thursday. However, prices will test the lower support at 1527. A breakdown below this level will see gold prices declining further. The next downside support is at 1508 level. Below this level the next downside is at 1485 region.