Main Market Themes
- Overall contained moves in global financial markets overnight amid global recession fear following weak China price data and jitters ahead of ECB policy announcement where new a new stimulus package is expected. Major global stock indices closed mainly flat while the global bond markets saw broad-based selloffs.
- The 30Y German bund yields bounced back to positive territory for the first time since 5-August as stocks rose following German Finance Minister’s comment on readiness to inject “many, many billions of euros” into the economy top avert a slowdown.
- The Sino-US trade war showed signs of cooling, and the risk aversion continued to fall. The US Treasury yield generally rose. The two-year and ten-year treasury yields rose by more than 8 basis points to a one-month high of 1.68%. 1.73%. The US dollar index closed slightly higher at 98.3, ending the four-day decline.
- The South China Morning Post reported that China may agree to buy more American agricultural products and increase the chances of reaching a trade agreement. Chinese Premier Li Keqiang said that China and the United States share a wide range of common interests and seek common ground while reserving differences based on the principle of equality and mutual respect, and find ways in which both sides can accept differences.
- Bloomberg reports that the US government is considering an administrative order to combat trafficking in the opioid analgesic fentanyl. The target is not limited to China, but will focus on China.
- Bolton, the US national security adviser with a strong external position, left. President Trump said that the White House no longer needs Bolton services, and many of his recommendations are not accepted by the government; Bolton claims to be voluntarily. Trump will appoint a new national security adviser next Monday.
EURUSD (Intraday bias: Bullish, consolidation above 1.10 continues)
From a technical and trading perspective last weeks move higher on the intraday charts demonstrated impulsive qualities as such today I am bullish above the weekly pivot 1.1010 with a stop just below 1.0970 targeting a move to test the monthly R1 at 1.1160/80 (as highlighted by the blue forecast candles on the chart).
UPDATE …EURUSD continues to consolidate in a 30pip range as traders pare risk ahead of tomorrow’s ECB meeting. There was another late drift higher driven by some noise that the ECB could delay QE and make it data dependent, however this move has since been retraced. Maintain my bullish stance above 1.10 targeting 1.1160.
GBPUSD (Intraday bias: Bullish, scope to test 1.2450)
From a technical and trading perspective headline risk weighs with the potential for the pair to retest support towards 1.22 watch for bullish reversal patterns to 1.2185 to set a base for the next leg of the corrective recovery to target 1.26.
UPDATE …GBPUSD two key levels of interest, if the current ending diagonal pattern holds (highlighted on the chart) I am looking for a test of 1.2450 where I anticipate offers to cap on an initial test, with the potential for a pullback to test bids towards 1.22, An early breach of 1.23 would open a test of the pivotal 1.22 support. (as highlighted by the blue forecast candles on the chart).
USDJPY (intraday bias:Bullish, Offers above 108 eyed)
From a technical and trading perspective the pair retains a bid tone supported by the reversal in US treasury yields, the pair looks poised to test offers above 108, where i will be looking for a tradable pullback to test bids towards 107, as these contain the correction there is the potential to set a base to make a sustained push through 108 en-route to 109.
AUDUSD (Intraday bias: Bullish, offers ahead of .6900 to be tested)
From a technical and trading perspective last weeks intraday price pattern has impulsive qualities suggesting pullback should be bought for another leg of corrective upside, on the day I am looking for the pair to trade with a bid tone, any pullbacks towards the .6800 level will be buying opportunities as the pair should find support setting a base for the next leg higher to target offers above 0.6900
UPDATE …AUDUSD remains buoyant supported by positive news flow on the US/China trade front. As .6840 supports it seems we can make an early challenge on the offers towards .6900 which I anticipate will cap on the initial test, setting a short term top and a tradable correction back to test bids towards .6800.