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Positive End To U.S. Session; A Risk Rally Built On Hope

Published 03/29/2019, 01:20 AM
Updated 03/05/2019, 07:15 AM

Asia builds on the theme

Equity and currency markets extended the positive end to the NY session yesterday with additional gains posted on the final trading day of the week, month and quarter. U.S. indices were up between 0.17% and 0.25% while China shares were up a whopping 2.9%, aiming for the biggest daily gain this week.

China A50 Daily Chart

China A50 Daily Chart

Source: OANDA fxTrade

Hopes for progress in the U.S.-China trade negotiations being held in Beijing were the main drivers though U.S. officials have commented that they’d rather spend weeks or even months on the negotiations to ensure China improves market access for U.S. companies while also protecting their intellectual property rights. The risk is that if there are no concrete positive developments at the weekend, this risk rally could quickly unravel next week.

Palladium bulls take a hit

One of the biggest moving markets this week has been palladium, which looks set for the biggest weekly decline in almost nine years, according to data compiled by Bloomberg. The precious metal hit a record 1,615 last week not it has been one-way traffic since then, with losses approaching 18%. Growth slowdown fears are crimping demand outlooks while hedge funds have been seen trimming speculative long positions recently following the metal’s meteoric rise. Palladium fell to 1,335 yesterday, the lowest in two months, and tested below the 100-day moving average for the first time since Sept. 4.

Palladium Daily Chart

Palladium Daily Chart

Source: OANDA fxTrade

German retail sales to slow

Germany’s retail sales are expected to decline 0.9% m/m in February, according to the latest survey of economists. This compares with a 3.3% expansion in January. The country’s unemployment rate is seen sliding to 4.9% in March, which would be the lowest since OANDA began compiling data in 2007. That kind of number could help lift EUR/USD from its three-week lows.

The U.K. focuses on the final (hopefully) vote in Parliament on PM May’s Brexit deal along with money supply data for January, Q4 GDP revisions and Nationwide house prices while the U.S. data slate includes the personal consumption expenditure prices index and personal income/spending for January. New home sales are seen rising 1.3% m/m in February following January’s 6.9% decline. The week rounds off with speeches from the Fed’s Williams WMB, Kaplan and Quarles.

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