You are here: Home > articles > Forex > European Open Preview – Risk sentiment boosted by Xi’s speech; US PPI due
European Open Preview – Risk sentiment boosted by Xi’s speech; US PPI due
April 10, 2018 8:26 amVideo
Latest News
- Technical Analysis – EURCHF ticks up after strong losses April 16, 2024
- Technical Analysis – JP 225 index tests crucial support zone April 16, 2024
- Market Comment – Stocks slide, dollar soars as rate cut bets take another hit April 16, 2024
- Forex forecast 04/16/2024: EUR/USD, USDX, Gold and SP500 from Sebastian Seliga April 16, 2024
- GBP/USD: trading tips for beginners for European session on April 16 April 16, 2024
- EUR/USD: trading tips for beginners for European session on April 16 April 16, 2024
- What’s next for markets amid Israel-Iran tensions? – Special Report April 16, 2024
- Technical Analysis – GBPUSD pulls back into the negative zone April 16, 2024
- Geopolitical developments and stronger US data push volatility to new highs across the board – Volatility Watch April 16, 2024
- Technical Analysis – AUDUSD breaks the lower bound of a sideways range April 16, 2024
- Video market update for April 16, 2024 April 16, 2024
- Hot forecast for EUR/USD on April 16, 2024 April 16, 2024
- Technical Analysis – EURUSD dives further near 1.0600 April 16, 2024
- XM 2024 Ramadan Promotion Winners April 16, 2024
- EUR/USD and GBP/USD: Technical analysis on April 16 April 16, 2024
- Key events on April 16: fundamental analysis for beginners April 16, 2024
- Overview of the GBP/USD pair. April 16th. The pound may rebound, but the flat is over, and there are no reasons for growth April 16, 2024
- Trading plan for GBP/USD on April 16. Simple tips for beginners April 16, 2024
- Trading plan for EUR/USD on April 16. Simple tips for beginners April 16, 2024
- Overview of the EUR/USD pair. April 16th. In plain text: The ECB will cut rates in June April 16, 2024
Here are the latest developments in global markets:
Major movers: Risk appetite recovers after Xi Jinping avoids trade provocations
Overnight, a speech by Chinese President Xi Jinping calmed the nerves of investors regarding any further escalation in the US-China trade spat. Speaking at the Boao Forum for Asia, Xi pledged to open up China’s economy further, to lower import tariffs, and to strengthen intellectual property protection. Perhaps most importantly, he avoided any provocative comments about trade and protectionism, all of which helped risk sentiment to recover as the probability of a full-blown trade war was seen as declining.
The trade-sensitive antipodean currencies rallied on the back of these remarks, with aussie/dollar and kiwi/dollar both rising by more than 0.4%. Meanwhile, safe haven assets such as the yen and gold retreated. Dollar/yen and euro/yen rose by 0.4% and 0.35% respectively. Meanwhile, stocks in Asia surged, while US equity futures jumped as well.
US stocks surrendered most of their early gains on Monday, with the S&P 500 closing just 0.3% higher, after advancing nearly 2.0% earlier in the session. The catalyst for the pullback were reports that federal agents had raided the offices of President Trump’s lawyer, Michael Cohen. The raid brought political concerns back to the surface, by reminding investors that the Mueller investigation is still ongoing and that numerous risks besides a trade war still loom.
The euro surged yesterday on the back of some optimistic remarks by ECB President Mario Draghi. The ECB chief noted that despite some weakness in recent economic surveys, the Bank expects the pace of economic expansion to remain strong in 2018. The implicit message was that the recent loss of momentum in the economy is unlikely to derail the ECB’s tightening plans, unless of course the slowdown intensifies much further.
Day ahead: US producer prices on the agenda
US producer prices for the month of March due out at 1230 GMT will probably generate most attention out of Tuesday’s economic calendar, before attention shifts tomorrow to another gauge of inflationary pressures, namely to consumer prices for the same month. Wholesale inventory data for February are also on the agenda on Tuesday out of the world’s largest economy, scheduled for release at 1400 GMT.
At the same time as US PPI figures (1230 GMT), Canada will see the release of building permits data for February, while a little earlier (1215 GMT) the print on housing starts for the month of March will be made public.
In oil markets, API data on crude stocks are due at 2030 GMT.
Any developments on global trade can spur positioning in equity markets; it remains to be seen whether positive sentiment will be maintained following the soothing remarks by Chinese President Xi Jinping. Also of interest will be Facebook CEO Mark Zuckerberg’s testimony before Congress on Tuesday and Wednesday in relation to data privacy leaks.
Policymakers making appearances include Dallas Fed President Robert Kaplan (non-voter), Bank of England Chief Economist Andy Haldane and European Central Bank policymaker Ewald Nowotny. The former two are scheduled to speak at 0830 GMT, while no specific time was released for the latter whose comments might be of most interest given that he will be talking about the ECB’s plans to end its massive stimulus program later this year.
Technical Analysis: Gold looking neutral in the short-term
Gold has retreated somewhat after hitting a six-day high of 1,338.02 earlier on Tuesday. The RSI is hovering around the 50 neutral-perceived level, supporting the absence of momentum in either direction – the upside or the downside – in the short-term.
Rising trade uncertainties could boost the perceived safe-haven asset, with resistance in case of advances potentially coming around the six-day high of 1,338.02 recorded earlier; the area around this level includes a couple of peaks from the recent past as well.
Conversely, receding trade tensions could lead to declines as investors seek riskier assets. Support could be taking place at the moment around the current levels of the 50- and 100-period moving averages at 1,332.04 and 1,330.50 respectively.
A catalyst supporting the greenback also has the capacity to weaken the dollar-denominated metal and vice versa.
Related Posts: