Quick Facts

Markets Enter Choppy Waters Ahead of Crucial US Economic Release

As the week begins, the global financial markets are exhibiting a sense of listlessness, with traders struggling to find direction in the absence of significant market-moving events. The recent euphoria surrounding the China-US trade deal has started to fade, leaving investors searching for new catalysts to drive market performance.

A Lack of Direction

The lack of direction in the markets is not entirely unexpected. With the global economy navigating uncertain times, investors are naturally cautious about making significant bets. The recent trade deal between the US and China has provided some much-needed relief, but the reality is that the agreement’s impact on the global economy is still being fully absorbed.

Saudi and Qatar Deals: A $1 Trillion Boost

In a surprising move, US President Donald Trump announced that the deals struck with Saudi Arabia and Qatar are worth over $1 trillion to the US economy. The Saudi deal, in particular, is likely to be a significant boon for the US energy sector. With Saudi Arabia agreeing to invest in US crude oil production, the deal has the potential to create thousands of new jobs and stimulate local economies. However, the impact on the global oil market is likely to be more nuanced, with prices having already factored in the news.

Key US Data

As we look ahead to the day’s economic calendar, key releases from the US are set to take center stage. The Producer Price Index (PPI), Retail Sales, and Unemployment Rate data will all be under the microscope, with investors hoping to glean insights into the current state of the economy.

Forex Implications

As we look to the forex markets, the lack of direction is likely to continue. With the recent trade deal euphoria fizzling out, investors are likely to focus on shorter-term factors such as economic data and central bank decisions.

The US dollar is likely to remain under pressure in the near term, with the EUR/USD pair potentially pushing higher towards 1.1400. However, any sustained move above this level could be met with resistance, as the pair approaches key resistance around 1.1500.

In commodity markets, the impact of the Saudi and Qatar deals is likely to be felt most acutely in the oil market. With prices having already reacted to the news, the focus will turn to the ongoing supply and demand balance. A breach of the $60 per barrel level could prove significant, with implications for the global economy and commodities more broadly.