European traders are looking at the Asian session and picking up the momentum from there. Overall, it is safe to say that there isn’t a whole lot of optimism among investors and traders and caution is the keyword that comes to mind when you look at the European and US trading futures.
This week, investors and traders will also be focused on geopolitics as an important meeting between President Joe Biden and President Xi Jinping will unfold. Remember that the relation between the world’s biggest economies started to turn sour during the Trump era, and things haven’t improved much ever since. It was widely expected that President Joe Biden would make a U-turn on a number of major policies or initiatives that were put in place, in order to rebuild the relationship between the countries . However, we have seen very little progress on this. So far, the relations between Washington and Beijing are still sitting at their lowest level, and traders are hoping that this meeting will give them a reason to feel a little more comfortable when it comes to geopolitics.
Traders will also continue to focus on the ongoing earnings season this week, and focus will be on some major retail giants such as Walmart, Target, Home Depot a few more. A large number of them will be reporting their earnings tomorrow and the hope is to see a strong number. At the same time, traders will be paying close attention to their supply chain bottleneck issues. Remember, it is the constraint on the supply chain which has pushed the prices of everyday things through the roof.
Only recently, we saw the US CPI numbers sky high. Given the fact that wages have also moved higher, and many consumers are hoping that it is only a temporary situation., the anticipation is that inflation will ease off. Thus, any good news on the supply side could really spur positive sentiment among investors and traders.
In addition to this, we also have the US Retail Sales number coming out tomorrow as well and they will be released at 13:30 UK time. Once again, retail consumer health will be exposed, and if it comes to light that things are improving, we are likely to see traders favouring riskier assets.
Today, we are seeing the precious metals easing off in the commodity arena, and the prices are moving away from their highest level in nearly five weeks. In the past two weeks, we have seen some tremendous gains for the yellow metal, and it seems like traders are now in the mood to continue to shave some profit off the table. Another important factor to note here is that gold prices have taken a wild turn as many market players were expecting, on the back of the Fed’s monetary policy. There is no doubt that the Fed’s monetary policy is less gold-friendly than a few months ago—the Fed has started the tapering process. In a typical textbook trade, this would have meant that gold prices should have fallen off a cliff, but that is not what we have experienced so far. Gold prices have been strong and in the last week, we have seen more strength.
A lot of eyes are also on the dollar index as well, which is trading stronger against the gold price today, and this is keeping the gold price under pressure today.
Traders are really hoping to see a mega rally in Bitcoin. With half of November over; we have not yet seen that. But this is not to say that we have not seen any rally in November. We believe Bitcoin started the month on a positive note; however, things have been lagging for the past week. The last weekend’s price action was also lacklustre, and if we continue to see this trend, then we can very much say bye to the crypto’s seasonal rally which takes place at this time of the year. .
Over in Asia, we did see an upbeat economic set of readings. For instance, the retail sales In China rose 4.9% year-year in October against the expectations of 3.5%. Industrial output increased 3.5% as compared to the last year. This number also was able to come ahead of the expectation of 3%. The fact is that China is the second-biggest economy in the world and traders watch the economic data coming out of China very carefully and they calibrate their trading strategies accordingly. The data is positive, and it has set a more upbeat tone, not for Asian markets, but it is likely to have spill-over effect in the European trading session as well.