Market News & Analysis

Risk starts week on positive note, busy news week coming up

May 20, 2019 | Market Update

High-impact economic news:


So far Monday’s trade has seen a return to risk, after last week ended on a weaker note for stocks. Traders heavily favoured safe havens like the USD and Yen most of last week as we saw some strong selling on the EUR, AUD and GBP. 

The ASX and AUD have seen good demand this morning boosted by the Australian elections that showed a surprise Liberal party win. The Labor party was the favourite heading into Saturday’s voting but failed to take key seats in Queensland. Scott Morrisons return to power has been compared to some of the recent underdog shocks including Trump’s win. Regardless of how it’s spun the facts are a majority of Australian voters were not sold on Bill Shortens and Labors policies. 

The AUD has been the main risk currency in movement, the AUD opened higher with solid gaps to the USD and JPY. The ASX is trading 0.5% higher. Stocks in Asia are mixed the Nikkei higher while China remains in the red with confidence remaining low after Friday’s sell-off. Some Chinese stock indexes lost over 2% in Friday’s trade due to ongoing trade worries with the U.S. Huawei is another factor, the U.S. government is now saying you will need a licence to deal with the Chinese telecommunications company.

Brexit worries came back into the spotlight on Friday sending the GBP sharply lower, the GBPUSD lost 74 pips. The drama that is Brexit continues, UK prime minister May is facing calls to resign Labour talks collapse killing off the current EU withdrawal plan. 

The flight to safety in Friday’s session didn’t favour Gold as it was hammered $8.80 lower, Gold had a week to forget losing $25.90 from it’s high. the USD was one of the main negative influences for the yellow metal. 

This week traders will continue to focus on trade updates between the U.S and now we can also add the EU into the mix. Brexit has returned to the radar and could create volatility for the GBP. News wise its busy data wise, some of the key events will be The FMOC meeting minutes and European Parliamentary Elections which start on Thursday and run through to Sunday. 

GBPUSD daily chart showing the 277 pip washout last week. That was one potent Lower High!

Good trading from EightCap

Sources – CNBC

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