- Little optimism about Trump’s less harsh measure on Chinese investment
- Oil market is having more Cinderella moments than one could imagine
- Gold isn’t seeing any meaningful signs of life
European markets have failed to shake off the sell-off momentum from Wall Street, traders have shown little optimism about the Trump administration’s less harsh measure on Chinese investment. The German July consumer confidence data has also provided more hopes as actual number (10.7) came ahead of the forecast (10.6). The euro currency still remains under pressure despite an upbeat reading on German consumer climate. Euro traders would be watching the ECB’s economic bulletin closely today. The ECB is set to wind up the quantitative easing program later this year and the economic bulletin would provide more aid for traders about the ECB’s hawkish behaviour towards its monetary policy.
Furthermore, the unity between the EU leaders would be put to test when they will meet in Brussels today. There are many issues which will test the bloc’s unity. Germany would make sure that it isn’t the country which is sharing the economic burden while Italy would have to answer and confirm its stance on the immigration issue, especially given that the country refused to accept the ship full of immigrants.
The oil market is having more Cinderella moments than one could imagine. The WTI price touched multiyear high and now it has eased off as speculators decided to reduce their positions. This has created some weakness for the price. The open interest for crude oil market is still showing more positive outlook hence it is possible that the current weakness may not last for long. The situation over in Libya continue to remain unstable, government and rebels both struggling to gain more grounds and this instability is impacting the supply. From a technical point of view, we think the bull momentum is strong but the RSI is overbought zone and traders should take caution.
The precious metal isn’t seeing any meaningful signs of life as the dollar index has a strong influence. Only a weaker dollar index would bring the shine back for the metal. For now, there is only one clear trend for the dollar index which is skewed to the upside. The dollar index’s strength is mainly powered by hopes for higher rates and rising yields and there seems to be no change in this any time soon.
Political and economic uncertainties aren’t having any strong effects on the gold demand. In fact, looking through the lens of the political instability, things are much calmer after President Trump has softened its stance towards China. Having said this, the bitter US-China row could pick up steam anytime so we would not bank too much on Trump’s current softening stance towards China.
