It has been a turbulent trading week for financial markets, as investors tussled with ongoing trade developments, Brexit uncertainty and geopolitical tensions across the globe.
Risk sentiment crumbled today on reports circulating around China’s lack of interest to resume trade discussions with the United States. Global equity markets were flashing red amid the uncertainty and this negative mood could roll over into the new trading week.
Markets remain uncertain at this point in time as to whether the seemingly confrontational rhetoric following the escalation in the US-China trade dispute over the past two weeks actually spells the death of any trade deal.
Perhaps the weekend couldn’t have come at a better time, allowing time for investors to digest the latest commentary and ascertain whether both sides are playing hardball as an intended signal, a show of brinkmanship, or just plain noise before the scheduled G20 meeting in Japan next month.
Pound hammered as Brexit talks collapse
It was already a terrible trading week for the British Pound thanks to the political risk circus in Westminster and Brexit-related uncertainty.
Recent reports of cross-party talks between the Conservative and Labour party concluding without a deal have compounded to the Pound’s woes today. With the failure of cross-party talks and Theresa May agreeing to set a date for her departure fueling concerns over the UK potentially crashing out the EU without a deal in October, Pound weakness is likely to remain a dominant theme.
With regards to the technical picture, the GBP-USD is bearish on the daily and weekly charts. The currency pair extended losses on the negative news this morning, with prices trading around 1.2750 as of writing. A weekly close below 1.2820 has the potential to open a path towards 1.2700 and 1.2620, respectively.
All eyes on Nigeria GDP in the week ahead
Next week kicks off with a bang for the Nigerian economy as GDP figures for Q1 are scheduled to be released on Monday. Investors will closely scrutinize the data for insights into the health of the nation during the first quarter of 2019. A figure that exceeds market expectations is likely to boost sentiment over the Nigerian economy.
Commodity spotlight – Gold
This has not been the best of trading weeks for Gold with prices trading around $1283 as of writing.
Conflicting signals over the direction of US – China trade talks caused risk sentiment to swerve back and forth which ultimately impacted appetite for Gold.
Although the yellow metal is trading back towards $1285 level at the time of writing, bulls remain in control above $1280.
With uncertainty over trade talks likely to stimulate the flight to safety, safe-haven assets like Gold are poised to remain buoyed. Technical traders will continue to closely observe how prices behave around the $1285 region.
Bulls need to break back above $1300 for prices to push higher in the medium term.
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