Market dynamics: Global markets mixed after US-China trade deal


Washington and Beijing cooled their trade
war last week, reducing some US tariffs in exchange for an increase in Chinese purchases
of American farm products and other goods. The US Dollar fell sharply against a basket
of major currencies on Friday as news of an initial US-China trade deal and an election
victory for the UK’s Brexit-backing Conservative Party hurt safe-haven demand for the greenback. The US dollar index fell by 0.2% to close
at 97.17 on Friday. For the week, it also lost 0.2%. However, overall, the index is up roughly
by 1.2% in the year-to-date, surging in strength despite summer recession warnings and continued
trade war tensions. Meanwhile, the British pound remained bolstered
by last week’s election win for British Prime Boris Johnson’s Conservative Party. That fueled expectations that the Brexit uncertainty
will end soon. Sterling rose by as much as 1.2% on Friday
to end the session at 1.3326. For the week, the UK currency gained almost
1.3%. In the meantime, the euro showed little immediate
reaction to data showing eurozone business growth remained weak in December. The common currency dipped by 0.08% on Friday
to close at 1.1121. For the week, it was almost flat. Elsewhere, Bitcoin price is back in a downtrend. Unfortunately for bulls, analysts are currently
charting that bears remain in control of the cryptocurrency market. Bitcoin price somewhat recovered by 0.8% on
Friday to 7,283.2. Still, for the week. The crypto king lost 2.1%. Forex investors and traders will expect the
economic statistics to have an impact on the majors. On Tuesday, November US industrial production
figures are in focus ahead of December’s Philly FED Manufacturing PMI due out on Thursday. Wrapping up the week, finalized 3rd quarter
US GDP, November personal spending, and preliminary December consumer sentiment figures are due
out. Outside of the stats, geopolitics remains
in focus. The markets will be looking for the details
of a phase 1 agreement and whether there is any hope of a full-blown agreement. In the commodities market, oil prices hit
a three-month high on Friday amid ebbing uncertainty around US-China trade and Brexit. Brent, the global oil benchmark, rose by 1.6%
to $65.22. Week-on-week, Brent advanced by 2.8%. Uncertainty around trade has weighed on global
economic growth in recent months, prompting both the International Energy Agency and the
OPEC to slash their oil-demand growth estimates over the course of this year. Investors’ increased optimism buoyed commodities
and was compounded on Friday by election victory for UK Prime Minister Boris Johnson. Market participants said policy signals from
the US Federal Reserve were also supporting oil futures. Thus, WTI rose by 1.5% on Friday to settle
at $60.07. For the week, it advanced by 2.81%. Meanwhile, gold futures also rose by 0.6%
on Friday to settle at 1,481.20. For the week, the price was still in a downtrend.

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