By Deepta Bolaky
Trade optimism has receded and investors are concerned that Phase One of the trade deal might not see the light by the end of this year. Adding up to the current uncertainties, the situation in Hong Kong could complicate matters.
After months of unrest, the US Senate passed the Hong Kong Human Rights and Democracy Act though a voice vote. The Act directs:
“Various departments to assess whether political developments in Hong Kong justify changing Hong Kong’s unique treatment under U.S. law.”
China has vowed to retaliate with strong opposing measures if President Trump signed the Act into law. Wall Street struggled to move higher and closed in negative territory on Wednesday.
In the FX market, major currencies were mostly weaker against the US dollar. The FOMC minutes was the major event in the US session on the economic front. However, it did not reveal anything new other than the Fed is on pause and will only cut interest rates if there is a significant slowdown.
Amid a risk-off environment, investors sought safety with the haven currencies like the Japanese Yen. The USDJPY was sent on the offer after the reports that a trade deal could slip into 2020. The pair pared some of the earlier gains and dropped below 108.50 before stabilising around that region.
USDJPY (Hourly Chart)
Source: GO MT4
The oil market found some support from the better-than-expected EIA report. WTI and Brent Crude rose in the final hours of trading when the weekly reports revealed a lesser increase in US crude oil stocks.
As of writing, WTI and Brent Crude are trading in the vicinity of $57 and $61 respectively.
USOUSD and UKOUSD (Hourly Chart)
Source: GO MT4
Gold is benefitting from haven flows on the back of trade uncertainties. However, the FOMC minutes reinforced the argument that the Fed is on rate cut pause which has limited the gains. The fact that the first phase of the trade deal might not happen before the year-end have allowed the XAUUSD pair to firm.
As of writing, the pair was trading around $1,475 region.
XAUUSD (Hourly Chart)
Source: GO MT4
Foreign Bond and Stock Investments, All Industry Activity Index (Japan)
Industrial Production (Switzerland)
ECB Speeches and Monetary Policy Meeting Accounts (Eurozone)
Fed Speeches, Philadelphia Fed Manufacturing Survey, Jobless Claim, and Existing Home Sales (US)
BoC’s Governor Poloz Speech (Canada)
|Friday, 22 November 2019|
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