Asian markets gain as US-China talks resume
Asian markets firmed in early trading as investors cheered the talks between the United States and China. Over the weekend, officials from Washington travelled to Beijing where talks will happen this week. Investors believe that these talks will lead to a deal that could put an end to the trade war. They hope that discussions will yield results this time after failing to do so last year. Both Donald Trump and Xi Jinping are desperate to have a deal especially after the recent crash in the markets of the two countries.
Data from Japan showed that the country’s service sector lagged in December because of poor weather and low demand. The data from Nikkei-Markit showed that the purchasing manufacturing index dropped to 51, the lowest level in three months. This drop brought it closer to the important 50 level range. A PMI reading below 50 is an indicator of contraction in the industry. The drop was also in contrast to the growth seen in the manufacturing sector in December. The PMI data released last week saw an improvement of 52.6.
The price of crude oil continued an upward streak started a week ago. The reason for the increase is that Saudi Arabia and OPEC have started to support the crude oil market by reducing supplies. This is in line with the outcome of the OPEC meeting held in December, during which members pledged to slash production by about 1.2 million barrels. A continued reduction will see the price continue to rise although an important resistance to both Brent and WTI is nearing.
The EUR/USD pair continued the upward momentum started a week ago and reached a high of 1.1430. This was the highest level since Wednesday last week. The current level is higher than the 14-day and 28-day simple moving average while the RSI has moved closer to the overbought level of 70. The weakening of the USD comes after the impressive jobs data released on Friday.
The GBP/USD pair continued the strong upward momentum started last week. After falling to the YTD low of 1.2424, the pair managed to recover and is currently trading at 1.2748. The RSI on the hourly chart has continued to rise and is currently near the overbought level of 30. At the same time, the MACD remains strongly above the signal line, an indication that the upward trend could continue. However, the sharp increase in the pair’s price could expose it to a sharper drop as Brexit confusion intensifies.
In December, the price of Brent crude dipped to a low of $50 a barrel. This year, the price has continued moving up and on Friday, it reached a high of $58. The surge in price came as OPEC members started slashing production and as US inventories declined. The current price is slightly below the upper line of the Bollinger Bands while the RSI indicator is signaling more upward trends. There is a likelihood that the price will continue rising as it approaches the important resistance of $60.