HK bill adds on trade uncertainty, US GDP beats | CMC Markets Daily Commentary
USD/CNH spiked by over 100 pips to 7.027 following President Trump’s decision to sign the Hong Kong (HK) bill. This is expected to complicate the context of the ongoing trade negotiations with Beijing and thus add on trade uncertainty.
Asian markets are likely to be under pressure today as investors re-assess the trade risk. Greater China markets including HK and Shanghai are most vulnerable to adverse trade news.
US Q3 preliminary GDP reading surprised markets on the upside, which defied recession fears and suggested a faster-than-expected recovery could take place in Q419 or Q120. Q3 GDP reading came in at 2.1%, smashing earlier forecast of 1.9% growth. Favourable macro data sent US equities to record highs overnight but unwinding activities kicked in at Asia open as traders reacted negatively towards the HK bill.
It is worth noting that the durable goods order – a key measure of economic activity and manufacturing sentiment – was up 0.6% in the third quarter, versus -0.8% forecast. Durable goods are orders intended to last for 3 years or more. This figure includes defence and transportation and thus is a good indicator of manufacturing activities in the US. Increased orders forecast an increased output to meet demand.
The DoE petroleum report showed US commercial crude inventory climbing by 1.57 million barrels last week, higher than the forecast of a 0.5 million drop. Crude oil price fell slightly this morning to US$ 63.8 for Brent. Oil traders are eyeing the upcoming OPEC meeting on 5th December for clues of the oil committee’s future output control.
Technically, Crude oil prices are trending up in an ascending channel formed since early October. Immediate resistance level for Brent can be found at US$ 64.4 (50% Fibonacci Retracement). The next key level is the 61.8% retracement level at US$ 66.25 area.
Crude Oil Brent – Cash
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