Risk Assets Recover as Investor Sentiment Picks Up
Equity markets led a strong recovery following strong declines just earlier this week. This came after investors managed to digest the developments involving the US-China trade spat.
However, investor sentiment still remains cautious, especially after the US labeled China as a currency manipulator. Economic data was also sparse on Thursday.
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Euro Trades Flat, Following Cues from USD
The euro traded flat on Thursday. The common currency closed almost near the open. A lack of economic data and any major developments in regard to the US trade dispute kept the currency pair in check. However, this could change with the release of the German trade balance report.
EURUSD Could be Waiting for a Breakout
The currency pair is firmly stuck within the range of 1.1250 and 1.1188. This consolidation comes right after the euro posted strong gains since the middle of last week. As a result, we could expect to see the EURUSD aiming higher. A breakout above 1.1250 will potentially give way for 1.1340 level at the very least.
Sterling Consolidations Ahead of GDP Report
The pound sterling has been trading flat over the past few days. The Brexit narrative has taken a backseat, especially in light of the US-China trade war. UK’s PM Boris Johnson expressed confidence that European officials will be flexible in negotiating a Brexit deal. On the economic front, the quarterly GDP report, manufacturing, and industrial production numbers are on tap today.
Upside Bias is Building Up in GBPUSD
GBPUSD could be seen building an upside bias. This comes as the recent consolidation near the lows has formed a wedge pattern. A breakout to the upside from this consolidation pattern could signal further gains. The pair could be looking to correcting towards 1.2400 level at the very least. A close below 1.2126 will, of course, invalidate the upside bias.
Gold Eases from the $1500 Handle
The precious metal, tracking the market sentiment was seen easing back on Thursday. Right after testing highs of 1500, gold is currently consolidating near the highs. This could possibly see either a renewed momentum building up or perhaps an impending correction. The US producer prices index report will be the only report coming out during the NY trading session today.
Can XAUUSD Post Further Gains?
The current consolidation could see further gains in store. However, a lot will depend on whether gold can break out convincingly above the 1500 handle. Given the fact that this is a psychologically strong resistance level, we could expect to see some downside. The recently breached support area of 1431 – 1428 will be the most appropriate downside target in gold.