Trump Inspired Rally Faces Headwinds

Global stocks could edge lower on Friday if the renewed Trump uncertainties encourage investors to maintain a cautious trading stance. Asian shares have already turned mixed following the soft China trade data which soured investor risk sentiment, while the rising Trump fuelled anxiety could obstruct gains in Europe. Wall Street traded moderately lower on Thursday and may be exposed to downside pressures as the ‘Trump trade’ effect losses momentum. With the layer of uncertainty from the events of this week potentially rolling over into the new trading week, stock markets may be pressured further as investors offload riskier assets and turn to safe-haven investments.

Dollar under pressure

The Dollar stumbled into Friday’s trading session under renewed selling pressure as bears exploited the loss of confidence in the highly discussed U.S reflation trade. The fears of Donald Trump’s proposed fiscal stimulus policies failing to meet expectations have risen after his press conference, which failed to provide investors with heavily sought clarity. Although the overall outlook for the US economy continues to look encouraging amid the positive economic data and hawkish comments from Fed officials, uncertainty over Donald trump’s economic policies could pressure the Greenback. Investors may direct their attention towards the US retail sales report which if exceed expectations could fortify the positive sentiment towards the US economy.

From a technical standpoint, the dollarindex remains pressured on the daily charts with a breakdown below 101.00 encouraging a further decline lower towards 101.00.

Trump jitters elevate Gold

Gold appreciated to fresh seven-week highs above $1205 on Thursday after the combination of dollar weakness and renewed Trump jitters encouraged bulls to install heavy rounds of buying. The diminishing optimism over the highly discussed reflation trade following Donald Trump’s press conference has generated uncertainty, consequently uplifting gold. With concerns still lingering over the Brexit woes and political risks in Europe weighing heavily on sentiment, the yellow metal could remain buoyed in the shorter term. While the gains this week have been encouraging for the bulls, there remains a threat of the US rate hike expectations limiting upside gains on the zero-yielding metal. A strengthening dollar could provide enough encouragement for longer term sellers to utilize the $1210 resistance on gold. If this level defends firmly then prices could edge back down towards $1160.

Commodity spotlight – WTI

Oil markets were uplifted during early trading on Friday following reports that major oil producers including Saudi Arabia and Russia were cutting oil production in an effort to limiting the global oversupply. While oil markets may enjoy further speculative boosts from the prospects of lower global supply, participants may need hard evidence of supply actually declining for the current rally to remain sustainable. Taking a look at the charts, WTI Crude is pressured below $53 with further weakness potentially dragging prices lower towards $52.

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