US China phase one deal provides further confidence

As the phase one deal has been agreed upon and nears its signing, analysts believe stock markets could be heading higher into year-end, and even continue into the first quarter of 2020. The deal has relieved global financial markets from a significant portion of economic risk. Also, some economic data from many parts of the world (US, China) indicate manufacturing activity has been picking up, providing additional positivity for the future. According to US President Donald Trump the deal will be singed very soon. Today new reports have surfaced implying the Chinese could be removing further import tariffs on approximately 850 products, in order to increase the imports of consumer goods. The news confirms that the trade front could be on very good terms and further positive updates on the matter could strengthen currencies like the AUD. AUD/USD moved higher on today’s opening and is seemingly getting closer to our 0.6930 (R1) level. Please note this level has been breached to the upside on the 13th of December, yet the currency pair latter retraced lower indicating a false break. Please note the Aussie has moved in a sideways motion from the 17th to the 19th of December between our 0.6850 (S2) and our 0.6875(S1) and after moving higher, the Aussie could be confirming the currency is in a slight but steady upward momentum. Please note Aussie traders maybe waiting for the phase one deal to be singed to take further action and push the currency higher as that would also confirm the US and China could be looking to start new negotiations on the next trade deal.

North Korea seeks attention through threats

Pyongyang has been irritated for some time know after its halt of nuclear and long-range missile tests may have not been appreciated as much as they wanted by the US. North Korea’s pledge to end economic sanctions against it, maybe forcing its officials to take desperate measures. Reports indicate the North Koreans have set a Dec. 31 deadline for the United States to restart negotiations or reduce/ remove sanctions. In any case, the US has not replied. If the North Koreans are preparing to take military actions or ballistic missile launches as they have done in the past, the effect may be passed to the financial markets and safe haven instruments like Gold could see further volatility upon release of the news. In addition, meetings between China, Japan and South Korea this week could have the matter in focus. Gold was among the instruments that had increased volatility in today’s Asian session as the precious metal showed its intentions to move higher during the timeframe. Even in the early European morning today the precious metal stabilized above our 1479 (S1) level. Our (S1) had been tested various times in the previous week but the metal did not seem to have the power to surpass it. Well, at the moment it is trading higher than the (S1). In case XAUUSD comes under further buying interest it could move higher to test the 1492 (R1) level that was last seen on the 7th of November. The next stops higher could be the 1504 (R2) or even the 1514 (R3) both in case of a strong bullish momentum. In the opposite direction, the precious metal could be in to retrace lower and head back to the (S1) as mentioned above. Yet even lower the most possible stops could be at the 1466 (S2) or even the 1454 (S3) levels.

Other economic highlights today

In the American session today we get the US Durable Goods Orders for November, and the New Home Sales for November. Furthermore, in between the two pre mentioned indicators we get Canadas GDP rate for October.

AUD/USD 4 Hour

Support: 0.6875 (S1), 0.6850 (S2), 0.6820 (S3)
Resistance: 0.6930 (R1), 0.6955 (R2), 0.6985 (R3)

XAU/USD 4 Hour

Support: 1479 (S1), 1466 (S2), 1454 (S3)
Resistance: 1492 (R1), 1504 (R2), 1514 (R3)

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