With the overnight news of the strikes in Syria by U.S. military, markets reacted rapidly. Gold and oil shot higher, while U.S. stocks dipped initially, only to rally back to nearly unchanged levels from yesterday's close. Crude oil has staged a very good rally during the past two weeks. It ran into key resistance at the $53 per barrel area.
Well, if you use the December 2018 Eurodollar futures contract as the swing vote, which most do, the price has made a new high on the year again this morning. Following the U.S. employment report, the UST 5-year touched 1.80% and the UST 10-year traded down to 2.27%. The yields are currently hovering at 1.83% and 2.31%, respectively.
Global stocks were vulnerable to sharp losses during late trading on Wednesday after investors were caught unprepared by the hawkish Federal Reserve minutes. The negative momentum has already rippled into Thursday’s trading session with Asian shares concluding depressed. European markets may be exposed to further downside shocks as anxiety ahead of the Trump-Xi summit dents risk sentiment.
European shares edged lower on Tuesday, after falls on Asian bourses, and low-risk government debt yields fell as political risks from a meeting between the U.S. and Chinese leaders to the French presidential election kept investors on edge.
Although UK’s FTSE100 attempted a miraculous rebound during early trading via sterling weakness, sellers simply exploited the technical bounce to drag prices lower. Wall Street may be in store for further punishment moving forward as risk-off is the name of the game ahead of the meeting between Donald Trump and Chinese President Xi Jinping.
I have been watching the price of coffee futures as of late, and was surprised to see the dip to the high $1.30's recently. Today, the market is right at $1.40 but showing a bullish technical pattern on the daily chart. Overall, it still is trading below the 200-day moving average.
Gold has also been capped by its technically-important 200-day moving average, which comes in at just shy of $1,259 per ounce. If this level were to break then we could see the start of a move towards the next potential resistance at $1,265, followed by the next bullish objective at $1,269/$1,270, which corresponds with the 61.8% Fibonacci retracement level against last year’s high.