Heightened concerns over on-going tensions between Uncle Sam and The Red Dragon (US & China) dominated the weekly open, with global equities (Asian Bourses) and emerging market assets gapping lower, due to a handover of risk averse sentiment from last Friday.
Global bond yields also slid lower and XAU/USD (Gold) was lifted to a six-year high to flirt with $1555 area. However, this “flight-to-safety” mood shifted quickly toward an appetite for yield when Trump released statements that China’s trade team contacted US negotiators twice to resume trade talks. But, China was not aware of any such phone calls. Although it was a misleading overstatement & misquote by Trump, the markets took this rumor as a motive to initiate recovery in risk assets. Early in the European Session, there were statements from both US & China Trade Officials that were “reconciliatory” and placated the markets into holding onto to risk appetite for the first trading day of the week.
In today’s trading webinar, we discussed the technical backdrop for the Aussie rally and how its correlation with the industrial metals (Copper, Silver, etc.) contributed to some of the “lift” and sustainability in AUD/USD. With the Bank Holiday in the UK, and summer volatility still present, this provided the perfect combination & environment for Aussie to climb higher versus the Yen(JPY) and the greenback(USD). With US Futures pointing towards a higher New York Opening, and yields slightly firmer ahead of then, we may continue to see risk-sensitive currencies poised to breakout to the upside on an intra-day basis. But, in the meantime, we are expecting currency markets to maintain their consolidation & range for another trading week.
For most of the webinar, we reviewed price action in AUD/USD, EUR/CAD, EUR/USD, EUR/AUD, and GBP/CHF to identify technical setups that were forming in the market for trade entry.
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Marvin Perry has been an active trader within the Forex market since 2010. He attended the University of Illinois in Urbana/Champaign, and graduated in 2002 with a double major in Cell and Structural Biology and Chemistry. He currently serves as an FX instructor & Quantitative Analyst for the Forex Anatomy Private Trading Community called "The Lab", where he conducts live weekly trading webinars & instruction on Fundamental Analysis & Inter-Market Interpretations of dynamic asset classes and their influence on currencies.