Risk-on sentiment dominated the early trades at the start of a fresh week, as markets rejoiced the renewed trade optimism following the upbeat remarks from both the US and Chinese officials. Also, reports that China raised penalties on the intellectual properties’ (IP) theft also bolstered the trade optimism.
Further, the positive outcome of the weekend’s peaceful Hong Kong election also offered some support to the risk appetite and the US dollar. The US dollar hit fresh weekly tops across its main competitors amid improved risk tones and stronger US fundamentals.
USD/JPY held the higher ground near multi-day highs in the upper bound of the 108.00 handle while both the EUR/USD pair and GBP/USD are looking to extend the latest leg higher. The Cable is supported by persistent Conservatives’ lead in the opinion polls and PM Johnson’s promise to reach a Brexit deal before Xmas. Meanwhile, EUR/USD is testing session highs on the 1.10 handle, awaiting fresh incentives from the German IFO data release.
After a data-busy last week, we have a relatively quiet week ahead in Europe, with the German IFO survey, due at 09:00 GMT, to headline. From the UK docket, the second-tier CBI Realized Sales Survey will be reported at 11:00 GMT, which is likely to have little impact on the GBP, as the UK political updates will continue to play a pivotal role ahead of the Dec 12 election.
The NA calendar also remains data-thin amid a few second-liner macro releases from the US and Canada. Therefore, markets will pay close attention to the US-China trade developments that continue to remain the main market motor so far this month.
Oil refrains from extending the previous declines while trading around $58.00 during Monday’s early session. Geopolitical tension surrounding Iran keeps risk aversion on cards with the market’s risk sentiment recovering off-late.
Gold is trading below $1,460, weighed in the open by a series of pro-risk appetite headlines and by a US dollar which has garnered demand on positive domestic data. There have been some promising gestures of a trade deal compromise with the Chinese raising penalties for IP theft as well as there being a landslide victory for the Pro-democracy candidates in Hong Kong.