The mounting anticipation ahead of the delayed healthcare vote later today has created an unnatural calm across the financial markets with investors adopting a cautious approach. Asian shares concluded mostly mixed during early trading on Friday amid the subdued trading mood with the loss of appetite for risk limiting gains in Europe.
Wall Street could come under pressure with participants on standby ahead of a critical healthcare bill that will assess Trump’s administration’s ability to push through legislations. While Trump has threatened that without a vote to the healthcare bill he will move on to other agenda’s, markets may interpret a potential failure today as something that could create some headwinds for the pending tax reforms and infrastructure spending.
Gold awaits healthcare vote
The renewed protectionism concerns and Trump jitters have triggered risk aversion this week consequently attracting investors to safe-haven assets. In times of unease, gold remains a trader’s best friend and such was displayed on Thursday when the metal punched above $1253. Although prices have edged slightly lower on Friday amid a stabilizing dollar, bulls remain somewhat in control on the daily charts above $1225.
Much attention will be directed towards the pending healthcare vote this evening which could create further uncertainty if the bill is rejected. With the growing threat of a rejection of the healthcare bill raising doubts over Trump’s ability to move forward with the pro-growth policies, the uncertainty should redirect participants to gold. From a technical standpoint, bulls need a solid break back above $1250 for a further incline higher towards $1260.
Commodity spotlight – WTI Crude
WTI crude found itself slightly supported on Friday following reports of Saudi Arabia’s production to the United States falling which offered a slight window for bulls to attack. Despite this new development, the oil markets remain under pressure as fears heighten over the global glut. Sentiment remains firmly bearish towards oil with further downside expected as the fading confidence over the effectiveness of OPEC’s output cut encourages bears to install renewed rounds of selling.
While speculations have heightened over OPEC extending the supply cuts by another six months, questions may be raised if such may stabilize the oil markets especially when factoring the resurgence of U.S. Shale. From a technical standpoint, WTI remains heavily pressured on the daily charts. Bears remain in firm control below $50 with the next level of interest at $47.
Currency spotlight – EUR/USD
The EUR/USD has bounced back in style this month as the receding political risks in Europe rekindled appetite for the single currency. Technical traders will be paying very close attention to how prices react to the 1.0800 resistance with a breakout encouraging a further incline higher towards 1.0850. If economic data from Europe continues to display signs of stability and the dollar weakens further, then the EUR/USD could be poised for further upside in the short to medium term.
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