The US-China trade deal was once again back in focus, pushing equities to resume the rally. The gains come after China said that its vice premier will be traveling to the US to sign the phase one of the trade deal.
The announcement indicates that the final issues have been resolved, paving the way for what could be a historic deal after almost a year of uncertainty.
Germany’s Industrial Production Rises in November
The latest industrial production figures from Germany saw a better increase. Industrial production grew 1.1% on the month in November 2019. This reverses the 1.0% decline from the month before. Economists forecast a growth rate of just 0.9%. Excluding energy and construction, industrial production was up 1.0% for the period.
EURUSD Finds Support, but Downside Could Prevail
The currency pair, after slipping past the rising trend line is consolidating near the horizontal support level of 1.1100. The bias is to the downside if there is a breakdown further. A decline below 1.1100 will signal a move to the next downside target of 1.1072. We suspect that in the medium term, the EURUSD will remain range-bound within these levels.
GBP drops as EU Doubts UK Trade Deal
The pound sterling came under pressure after EU officials ruled out the possibility of a full EU–UK trade deal by the end of 2020. The comments were made by Ursula von der Leyen. The comments come in contrast to the views from the British PM. Johnson is hopeful that the UK will be able to have a trade deal in place by the end of this year.
GBPUSD Retracing Losses For Now
Cable is retracing the losses from earlier in the day. This comes as price has broken past the support level of 1.3100. If this retracement ends near 1.3100 then we expect declines to resume. The descending triangle pattern remains in play giving the downside target to a minimum of 1.2960.
Gold Weaker as Fed Speeches Get Underway
Gold prices continued to fall on the broader market sentiment. Fed vice-chair Richard Clarida gave a speech on Thursday. He reiterated the general consensus that interest rates are appropriate for the economy for the time being. He reaffirmed that the Fed was ready to adjust policy if needed. Clarida was also optimistic about the economy, noting that consumers will drive economic expansion into the eleventh year.
XAUUSD Breaks the Major Trend Line
The precious metal has slipped past the second trend line as well indicating further weakness. Continued declines will see gold dipping to the 1534 handle in the near term. But considering the payrolls report today, we could expect a rebound. For the upside to regain momentum, XAUUSD will need to break past the 1594 highs.