Risk appetite fades on trade jitters, China back in focus

A wave of risk aversion swept across Asian markets Friday morning as renewed jitters over the progress of trade talks and disappointing economic data from China knocked investor confidence.

Stocks in Asia closed broadly lower amid the risk-off vibe with the negative mood infecting European markets. The sharp change of attitude towards global equities clearly highlights how global trade developments are heavily influencing market sentiment and risk appetite. With investors seen maintaining a cautious stance for the rest of the trading day, Wall Street may end up in the red. ECB extremely cautious. Concerns revolving around slowing global growth, trade tensions and Brexit uncertainty are external risks that may create headaches for ECB policymakers.

With the European Central Bank clearly in no rush to remove the zero-interest rate policy (ZIRP), interest rate differentials will certainly not be in favour of the Euro anytime soon.

As regards the technical picture, the EURUSD remains in a very wide range on the daily charts with resistance around 1.1450 and support found at 1.1290. An intraday break below 1.1330 may inspire a decline towards 1.1290.

Renewed jitters over the direction of trade talks have sent investors marching towards the Dollar.

Although the Dollar remains king in times of uncertainty, the question remains for how long? With soft economic data from the United States and dovish comments from Fed officials forcing investors to re-evaluate the Fed’s hiking path next year, Dollar bulls may be living on borrowed time. Investors will direct their attention towards the pending US retail sales figures which should provide fresh insight into the health of the largest economy in the world. A disappointing report is seen fueling market speculation over the Fed taking a pause on rate hikes next year, an outcome that will be Dollar negative. the Dollar’s performance. With appetite for the Dollar receiving a solid boost on trade jitters and soft China economic data, this will certainly punish Gold. Although the risk-off mood may attract some investors towards the precious metal, an appreciating Dollar is likely to sabotage any attempt for a rebound. Focusing on the technical picture, bulls lost control on the daily charts after prices broke below the $1,240 support level. Sustained weakness under this level could inspire bears to target $1,234.