· Major currencies marked time on Monday as traders looked to whether Washington and Beijing can soon sign off on a deal to end a trade war that has been a drag on global economic growth.
Faint optimism for a breakthrough was supported by a report on Sunday from Chinese state news wire Xinhua, which said the two sides had “constructive talks” over the weekend.
“It all sounds promising,” said Marshall Gittler Chief Strategist at FX analysis firm ACLS Global. “But China has made rolling back some of the tariffs a precondition for the agreement and it’s not clear whether Trump will agree to that...so net-net, it’s still up in the air.”
Against the safe-haven yen, the dollar a lifted a little to 108.81 yen.
The euro stood at $1.1062, bouncing back from a one-month low of $1.0989 set on Thursday. That helped to push down the dollar index to 97.905, its lowest level since Nov. 7.
The liveliest mover was the British pound, which rose 0.2% to a two-week high of $1.2929 after Prime Minister Boris Johnson said all Conservative Party candidates at the Dec. 12 election had pledged to back his Brexit deal.
· EUR/USD is trading above 1.1050, extending its gains. The US and China held high-level talks over the weekend and hailed them as "constructive." Several ECB members speak today.
Momentum on the four-hour chart has turned positive and euro/dollar has broken above the 200 Simple Moving Average after topping the 50 SMA late last week. Overall, bulls have gained considerable ground.
The critical test is at 1.1070, which is the fresh high and it also provided support twice in October. Further up, 1.1090 capped EUR/USD twice in November, and 1.1110 was a swing low early this month and also a considerable confluence line. Next, we find 1.1130 and 1.1180.
Support awaits at 1.1045, today's low point, followed by 1.1035, a swing low from early in the month. Next, we find 1.1015, and 1.10990 – November's low point.
· GBP/USD is trading around 1.2950, extending its gains. The Conservatives have been extending their gains in polls. PM Johnson and opposition leader Corbyn will address a business conference today.
From a technical perspective, immediate resistance is pegged near the 1.2945-50 region – marking the top end of a short-term descending trend-channel. The mentioned channel constitutes towards the formation of a bullish flag chart pattern, above which the pair seems all set to build on its recent positive momentum and immediately aim towards reclaiming the key 1.30 psychological mark.
On the flip side, the 1.2900 handle now seems to protect the immediate downside and is closely followed by the 1.2880-75 horizontal zone, below which the pair is likely to slide back towards testing the 1.2800 handle. Any subsequent slide could get extended, albeit might continue to attract some decent buying and remain limited near the trend-channel support, currently near mid-1.2700s.
· President Trump promised payouts for farmers caught up in the China trade war before Thanksgiving on Sunday.
"Our great Farmers will recieve another major round of 'cash,' compliments of China Tariffs, prior to Thanksgiving," Trump wrote on Twitter. "The smaller farms and farmers will be big beneficiaries."
"In the meantime, and as you may have noticed, China is starting to buy big again," he continued. "Japan deal DONE. Enjoy!"
The first phase of an agreement that may have as many as three phases will be "relatively limited in scope," with the major focus being on "current trade" and whether China is willing to commit to $40 billion to $50 billion of agriculture purchases, Commerce Secretary Wilbur Ross told FOX Business' Maria Bartiromo on "Mornings with Maria" on Friday.
· Oil prices were little changed on Monday following steady gains in the previous week with investors awaiting fresh clues over prospects for a trade deal between the United States and China, shrugging off concerns over steadily rising oil supplies.
Brent crude futures LCOc1 were at $63.30 a barrel at 0512 GMT, unchanged from the previous session. The contract rose 1.3% last week.
West Texas Intermediate (WTI) crude CLc1 were also unchanged at $57.72 a barrel, having gained 0.8% last week.
· OPEC will supply a diminishing amount of oil in the next five years as output of U.S. shale and other rival sources expands, the exporter group said, despite a growing appetite for energy fed by global economic expansion.
OPEC’s production of crude oil and other liquids is expected to decline to 32.8 million barrels per day (bpd) by 2024, the group said in its 2019 World Oil Outlook published on Tuesday. That compares with 35 million bpd in 2019.
Rising climate activism in the West and widening use of alternative fuels are putting the strength of long-term oil demand under more scrutiny. The Organization of the Petroleum Exporting Countries cut its medium- and long-term oil demand forecasts in the report.
OPEC supply has been falling in the last few years under a pact with Russia and other non-members to support the market. The resulting higher oil prices have bolstered non-OPEC output and OPEC is expected to restrain output in 2020.
· Saudi Aramco is worth up to $1.7 trillion at the price range set by the oil giant on Sunday, below the $2 trillion sought by Saudi’s crown prince but putting it in the running to become the world’s biggest IPO.
Aramco cannot sell its shares directly to investors in the United States and other markets, as the initial public offering (IPO) will be restricted to Saudis and those foreign institutions permitted to invest in the kingdom’s stock market.
This could just beat Chinese e-commerce giant Alibaba’s record $25 billion New York stock market debut in 2014.
· WTI: Bullish start to the week, $ 58 tested amid trade hopes
WTI (oil futures on NYMEX) opened the week on a positive note, having refreshed two-month highs at 57.98, as the US-China trade deal optimism continues to underpin the market sentiment amid a sharp drop in US Rigs Count and Aramco’s IPO offer.
In the week ahead, the US-China trade developments will be closely eyed alongside the US weekly oil supply reports and Aramco news to gauge the next direction in the prices.
Reference: Reuters, CNBC, FX Street
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