Equity markets managed to rebound on news that President Trump will be meeting with Vice-Premier Liu He.
The news comes as the US and China trade talks resume. However, over the past few days, risk appetite was volatile. Equities flip-flopped on new reports of the trade talks.
US Inflation Stays Flat in September
The monthly inflation report from the United States showed that consumer prices rose less than forecast. On a month over month basis, headline CPI was unchanged.
This missed estimates of a 0.1% increase. Core inflation rate rose 0.1%, falling short of the 0.2% increase. The US dollar weakened on the news. Headline inflation slipped to 1.7% on the year following the latest release.
Get our Weekly Commitment of Traders Report: - See where the biggest traders (Hedge Funds and Commercial Hedgers) are positioned in the futures markets on a weekly basis.
Get Our Free Metatrader 4 Indicators - Put Our Free MetaTrader 4 Custom Indicators on your charts when you join our Weekly Newsletter
EURUSD Jumps on the Back of a Weaker USD
The euro maintained the bullish momentum. The currency pair rose to a three-week high, briefly testing 1.1091. The gains come as the EURUSD has been trading below this resistance level over the past few weeks. Further momentum to the upside could see the common currency breaking past the current resistance level. The next upside target is at 1.1140.
Sterling Gains on Brexit Optimism
The pound sterling posted gains on Thursday after a meeting between the UK and Irish leaders. In a meeting between British PM Johnson and Irish PM Varadkar, both leaders committed to a statement claiming that a resolution to the Brexit stalemate is possible.
The news comes as the UK approaches the October 31st Brexit deadline. The news is seen as a positive development with the Irish backstop arrangement being the main focus of the talks.
GBPUSD Pares Losses, Can the Gains Continue?
The currency pair reversed the losses from earlier this week. After price action threatened the lower support at 1.2203, the news sent the currency higher. GBPUSD was testing the previously established resistance level at 1.2370. A clear close above this level will confirm further upside. The next main target is at 1.2533.
Gold Slips as Investor Optimism Rises
The precious metal extended declines on Thursday following days of uncertainty. By Wednesday, equities recovered, pushing appetite for risk assets higher.
This led to safe haven assets losing ground. While gold prices closed flat on Wednesday, the declines accelerated into Thursday’s close. Investors now wait for the conclusion of today’s trade meeting.
XAUUSD Fails to Breakout from the Range
The precious metal has been trading within the confines of 1508 and 1485. Repeated tests to the upside failed to result in a convincing breakout. This pushed gold prices lower on Thursday. Price action could drop towards the lower boundary of 1485. A close below the 1485 handle will confirm the downside bias in gold.