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Risk-on. Equities gain, gold and yen edge lower.

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Stocks in Hong Kong rallied 1.69% after more than 71% of voters went to ballots on Sunday. It is said that the pro-democracy voters should win the majority. Whether yesterdays vote could ease the tensions is yet to be seen.

Other stock indices opened the week on a positive note, US stock futures extended gains after the US stocks nudged higher on Friday as Donald Trump said a trade deal with China is getting very close.

Though we believe that the unilateral comments from Donald Trump do little other than injecting unnecessary volatility to the markets, Chinas step to raise sanctions on violations of intellectual property hinted that the EM giant is also making concrete efforts to clinch a deal to end a year-and-a-half long trade despite with the US.

The US dollar was broadly weaker against the G10 currencies. The Japanese yen was the only loser as investors moved capital to riskier assets.

Oil gained. The WTI crude traded near the $58 a barrel.

Gold and silver were offered in the overnight trading session. The ounce of gold is preparing to test the $1450 an ounce support, and the improved sovereign bond yields could push the precious metal off the edge. A key support is seen at $1447, the major 38.2% Fibonacci retracement on June September rise. A move below this level should indicate a medium term bearish reversal and encourage a further retreat toward $1410, the 50% level.

On the FX side, the EURUSD is bid above the 1.10 level on weaker US dollar. Due today, the German Ifo business climate is expected to post a slight improvement, which could give a hand to the buy side and encourage a rise toward 1.1043, the 50-day moving average.

The pound fluctuates within the 1.28/1.30 range against the US dollar. The pre-election shenanigans should prevent cable from clearing the thick layer of 1.30 offers, while the fact that a no-deal Brexit is certainly off the table should continue giving support to the pound near the 1.28 handle.

FTSE and DAX futures were higher in Asia, hinting at a positive start to the European session.

Opening calls

FTSE to open 26 points higher at 7353

DAX to open 71 points higher at 13235

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About the author

Ipek Ozkardeskaya is a senior analyst at MBAex with a solid experience in the financial industry. She has strong technical background in economics and quantitative finance. Previously, she worked as a senior market analyst in London Capital Group, FX strategist in Swissquote Bank and as a client sales executive at HSBC Private Bank in Geneva. She also developed quantitative models in automatic trading as part of BCV’s Structured Products team. Ipek has a Master’s degree in Financial Engineering & Risk Management and a Bachelor degree in Economics from University of Lausanne.
Contributing  author since 11/09/2017

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