Global equity markets look set to conclude the week on a positive note as renewed hopes for fresh US-China trade negotiations support risk appetite.
Market sentiment was also boosted by the Central Bank of the Republic of Turkey’s (CBRT) bold decision to hike interest rates which empowered the Lira and emerging markets. With US-China trade tensions easing and concerns revolving around emerging market risk receding, a risk-on mood could rollover into the new trading week.
Dollar bulls were missing in action today, and for the most part of the trading week, after a string of disappointing economic data weighed on expectations for a rate hike in December. A return in risk appetite accelerated the downside as investors reduced their safe-haven holdings of the Dollar. With easing US-China trade tensions fueling the risk-on sentiment, the Dollar has scope to depreciate further. Focusing on the technical perspective, the Dollar Index could tumble towards 93.90 if bears are able to secure a weekly close under 94.50.
It was a bullish trading week for the British Pound as positive Brexit headlines boosted buying sentiment towards the currency. Reports that Britain and the European Union have made progress on the Irish border issue boosted optimism over a Brexit deal being reached within 6-8 weeks. A broadly weaker Dollar offered the Pound an additional boost with prices trading marginally above 1.3100 as of writing. Bulls are likely to secure control if the GBPUSD is able to achieve a weekly close above the 1.3100 level.
Gold is poised to end the trading week on a high note mostly due to Dollar weakness. The fact that the precious metal has appreciated in a “risk-on” environment continues to highlight how the trajectory remains influenced by king Dollar. With Dollar weakness expected in the near term as trade tensions ease, Gold could witness further gains. Technical trades will continue to closely observe if bulls are able to secure a weekly close above the $1200 psychological level. Such an outcome may open a clear path towards $1214 in the short to medium term.
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