Equities Soar on US-China Trade Deal
Orbex Market Flash
The US dollar has been heavily lower over Friday morning on the back of the announcement that the US and China have signed the phase one trade deal. With an initial trade deal in place, the next round of US tariffs due on Sunday has now been canceled. The sense of relief is palpable today, with equities having soared to fresh highs and USD lower amidst safe-haven outflows. USD index trades 96.42 last.
EUR Higher on ECB Optimism
EURUSD has been sharply higher today on the back of the weakness seen in USD. In her first monetary policy meeting as ECB chief yesterday, Lagarde struck a slightly more optimistic tone.
She noted that while there are still downside risks to the eurozone economy, these risks have reduced slightly recently. EURUSD trades 1.1177 last, heading back towards 1.1217 resistance.
Conservatives Gain Power
GBPUSD has been sharply lower today. Despite the Conservative party win being seen as a positive for GBP in the medium term, it seems that the initial reaction is one of “sell the fact”.
Focus will now shift to when the parliamentary vote will be held on the PM’s Brexit deal. If the deal is agreed upon, GBP is likely to resume upside. GBPUSD is currently retesting the 1.3376 level from above.
SPX500 Hits New Highs
Risk assets have been firmly higher today. News of the US-China trade deal being signed has seen the SPX500 exploding to fresh, all-time highs, trading 3182.78 last.
With a deal now in place, and with further US tariffs avoided, the market is now hopeful that the two sides can begin to work on delivering a fuller deal to end the 2-year long trade war which has ravaged the global economy.
JPY Down, Gold Higher
Safe havens have been a little mixed tody. While JPY has been heavily lower against USD as a result of the sharp move higher in equities, gold has been a little higher against the dollar a result of the heavy weakness in USD.
XAUUSD trades 1470.59 last, continuing to recover against the post-FOMC crash. USDJPY trades 109.68 last, just below the recent 109.73 highs.
Crude Climbs on Trade Deal
Oil prices have been firmly higher today deriving strong support from news of the trade deal. The prospect of an end to the trade war, greatly improves the outlook or oil demand, keeping price well bid here despite the EIA reporting a further crude oil inventories rise this year.
Crude trades 59.79 last, close to challenging the 60 level which marks the top of the recent range in oil.
Loonie Heads Lower
USDCAD has been sharply lower today as a result of the weakness in USD and the rally in crude. The improved outlook for crude should help keep CAD supported in the near term and traders will be keen to see how the BOC receives news of the trade deal. USDCAD trades 1.3154 last, sitting just above the 1.3145 level for now.
Aussie Fails At Resistance
AUDUSD has been a little lower today, though most likely as a result of technical selling as the pair tested the .6931 October highs. The news of the trade deal should help support the Aussie in the near term, improving commodity prices and the trade outlook between Australia and China.