AUD recovered, Brent hits high on trade optimism

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American dollar, Euro, Australian dollar, Crude oil & trade talk trending points

  • Euro is on the defensive line, drenched on weak investor’s sentiment
  • Pressure mounts on US dollar followed by poor economic data including fed’s dovish stance and a forecast of GDP growth falling below 3 percent target
  • Australian dollar recovered most of Thursday’s (February 21st) loss, after China had issued a statement saying that the import of Australian coal would continue

US dollar outlook dimmed, Aussies recovered, crude and gold gain on trade deal hope

On Friday, the 22ndof February, 2019, the American dollar was little changed and the trading volume remained thin as well, following fed’s dovish stance and weak US financial outlook. As Fed forecasted a drop in US gross domestic product growth in 2018, which would likely to continue in 2019 as well, USD traded slightly lower against most of the currencies including majors such Pound Sterling, CAD and AUD. The US dollar greenback had closed the week 0.3 percent down, after gaining in excess of 1 percent last week amid an uneven outlook and mixed economic data. At the Friday’s market closure, the American dollar was 0.13 percent down at 96.48 and at 96.00 on average against 6 majors. Brent hits yearly high on trade talk optimism

USD daily price chart

USD daily price chart

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GBP/USD daily price chart

GBP/USD daily price chart

The Euro drooled on Friday on weak investors’ sentiment and inched lower to $1.1331 against USD, after a survey on Friday (February 22nd) had revealed that the business confidence dropped for six straight months in Germany on January, the kingpin of eurozone economy. The Australian regained 0.6 percent of Thursday’s loss and closed the week at $0.7130, after China had said that the imports of Australian coal would continue.

AUD/USD daily price chart

AUD/USD daily price chart

Besides, the traders had been betting heavily on an affirmative outcome of Sino-US trade talk, and the global stocks had edged higher on Friday (February 22nd), as US president Donald Trump pledged an extension of truce deadline if required, and said that he would meet the Chinese President soon after a meeting with Chinese Premiere Liu He in the White House.

Over a stack of positive headlines on trade talks, the MSCI index of Asia-Pacific shares gained as much as 0.73 percent, while the MSCI’s Index of emerging market shares gained 0.70 percent as well. In the wake of positive outlook towards a decipherable trade deal, the safe haven spot gold closed the day with a 0.34 percent gain to 1330.70, after gaining as many as 0.65 percent to 1333.37 during the Asia-Pacific trading session, with further gains appear to be likely.

Spot gold daily price chart

Spot gold daily price chart

Concomitantly, the Brent crude hits a fresh yearly high, as investors are betting heavily on the riskier assets over optimisms of trade talk and further OPEC cut to reach the previously agreed production cut of 1.2 million barrels per day. So far, oil producing nations had trimmed 8,00,000 barrels of crude output per day, and, as an aftermath, both Brent and US crude surged on Friday (February 22nd), posting 0.07 and 0.19 percent gains respectively. Brent crude hits a fresh 2019 high at $67.12 and closed the day at $67.09 per barrel, while the US crude had been residing at $57.16.

Brent crude daily price chart

Brent crude daily price chart

Bottom Line

From technical perspective, US dollar would likely to lose further ground amid weakening financial outlook and slowing economy, meanwhile the pound sterling appears to be holding forth on optimism of an extension in the Brexit deadline, as cited by EU director Jean Claude Junker.

The Aussies would likely to trade on a tight range between $0.71-$0.72, while a downswing risk below $0.70 had not yet been averted, as the Reserve Bank of Australian remained dovish as usual and quoted that they might propose two rate cuts this year.

Besides, the crude oil would likely to gather pace, as the scheduled time-frame of reaching agreed output cut in the first week of March had been closing in and trade talk optimism had been adding further bullish wind. Meanwhile, amid gloomier outlook in the global economy including a flurry of poor economic data across the world would likely to enhance gold’s safe-haven appeal and it would likely to retest its initial resistance at $1346.50 in a near-term outlook, a breakthrough level at which it was rejected earlier this week.

Read more AUD here

Disclaimer: The content of this article is personal opinion and should not be considered as investment advice or suggestion towards any trading activity.]

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