After a quiet start, an announcement hits the wires that China and the US agree to meet in October for trade negotiations. 

DJ futures immediately rally 300 points and the risk-on trades benefit across the board with USDJPY up to 106.75, EURUSD to 1.1065, GBPUSD to 1.2350 and AUDUSD to 0.6825. 

XAU goes the other way, slipping to 1539 from 1553. European equities, FTSE 100 aside, are enjoying the good news with the DAX up 100 points. All is well with the world as the US day gets going.

US stocks open higher as the futures had indicated with the DJ up 400 points in no time. 

USDJPY continues its march north, trading as high as 107.22. EURUSD also squeezes higher towards 1.1085. 

AUD flirts with major resistance at 0.6832 but falls a couple of points short. And while stocks continue to hold and even extend their gains, currencies are struggling to hold their gains. 

EUR dips back down to 1.1035, AUD to 0.6810 and USDJPY to 106.95. It appears that general USD demand at the 4pm London fix coupled with some JPY cross-selling has the market over-extended. 

XAU has suffered from the equity market euphoria plummeting from 1540 to 1507 before recovering to 1517. The selloff in US bonds saw the 10Y yield jump to 1.57%, which also didn’t help Gold’s cause. 

By the day’s end, the DJ was off its best levels but still closed up 372 points or +1.4% The S&P and Nasdaq closed up 1.3% and 1.75% respectively. 

For currencies, it was a quiet afternoon with levels virtually unchanged from the London close. Crypto markets also had a quiet day with BTC drifting off Wednesday’s highs down to $10,500. 

ETH followed a similar path down to $172.50. All eyes will now be on Friday’s US Non-Farm Payroll data for clues to the Federal Reserve’s next moves as well as how the economy is reacting to the current trade war. Should be a lively session!

Going to keep today’s technical piece very simple. 

Back to the Aussie! A level I have mentioned several times as being pivotal – 0.6832. The high? 0.6830. There’s a simple trade there somewhere my friends, although keep in mind the timing of Friday’s US Payroll data. 

David Hannigan
Author

A graduate of the Cass Business School, Dave's career began with Credit Suisse as an Equity Options Trader on the London Stock Exchange, before moving into the world of FX with Chemical Bank and Citibank. 1994 saw him join National Australia Bank, first as a Senior Dealer, then Senior Vice President and Chief Dealer.

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