Antipodean currencies on the rise as trade tensions are set to ease

Summary:

• Antipodean currencies gain in the morning following the news that trade frictions between the US and China may ease

• UK Prime Minister Theresa May suggests Brexit talks are nearing their endgame

• Oil prices extend their decline on Trump’s tweet

Trade tensions set to ease?

The morning European trading is bringing a higher demand for Antipodean currencies which are on the rise on the back of some encouraging comments concerning a trade dispute between the United States and China. Namely, Treasury Secretary Steven Mnuchin and his Chinese counterpart Vice Premier Liu He reportedly resumed last Friday discussions aimed at resolving the ongoing trade battle. According to the Wall Street Journal’s article both had a telephone conversation on Friday and both seem to want ease tensions ahead of a meeting of the leader of China and the US set for the end of November - during the G20 summit in Buenos Aires. The WSJ’s article says that the US demands that China will put forward a concrete offer before negotiations on a trade deal can take place. On the other hand, China worries that once it makes a formal offer it will lose leverage. Even as the latest phone call has yet to bring any material arrangements it has showed that both countries try to hammer out a common ground to continue negotiating. Therefore, one may expect that similar remarks will be coming out prior to the meeting in Argentina - it could potentially act in favour of riskier assets. However, looking at Asian stock markets one may arrive at a conclusion that it has not been the case here as most of them are falling. The major reason, however, is the Monday’s session on Wall Street which saw heavy declines. The SP500 (US500) lost 2%, the NASDAQ (US100) declined as much as 2.8% while the Dow Jones (US30) slid 2.3%.

NASDAQ (US100) bounced off its two moving averages seen at a daily time frame. As a result, one may expect the downtrend to extend reaching its new lows. From a pure technical standpoints we may set a target for bears nearby 6235 and 6355 points. Source: xStation5

Pound in the spotlight again

UK Prime Minister Theresa May said on Monday that despite still considerable unresolved issues the two sides were approaching the endgame in negotiations for the UK withdrawal from the bloc. She underlined that the talks were immensely difficult and there would not be an agreement at any cost. In early European trading the British pound is moving slightly higher but from a broader perspective the GBPUSD remains stuck between two crucial technical levels - 1.3340 and 1.2700. Today’s jobs report could inject more volatility in the pound but the prime factor standing behind almost all moves is still Brexit. Note that this is unlikely to change at least through several weeks until a binding agreement is reached.

The GBPUSD seems to be in a position to keep on falling toward 1.2700, the pivotal technical support. Source: xStation5

Oil loses ground on Trump’s tweet

Oil prices are down roughly 1% this morning extending their yesterday’s falls. The prime reason was a Trump’s tweet where the US President wrote: “Hopefully, Saudi Arabia and OPEC will not be cutting oil production. Oil prices should be much lower based on supply!” This is a clear indication that the US wants lower oil prices and Saudi Arabia and the entire OPEC should do the same if both want to ally with the US. It is worth adding some remarks from the US concerning a contentious Europe’s idea to bypass US sanctions on Iran via using a special purpose vehicle. The US said that it is not too concerned as companies are already withdrawing from this plan. WTI prices are trading at the lowest since mid-February.

In the other news:

• Australia’s business confidence and business conditions indicators dropped in October to 4 and 12 from 6 and 15 respectively

• New Zealand’s food prices declined 0.6% MoM in October

• Apple shares fell 5% due to rising concerns of the future demand as some company’s suppliers cut their forecasts

• Former Fed Chair Janet Yellen sees 3 or 4 hikes from the Fed over the next twelve months