G20: China-US Trade Deal In Question

The markets remained rather subdued on Thursday in the run-up to this weekend’s G20 summit. As Trump and Xi meet on the sidelines of the G20 summit, reports indicated that China is to submit its set of terms to be met before further progress could take place. The new developments raise questions on whether the trade talks will be amicably settled. One of the demands from China includes a rollback of all the recent tariff hikes levied by the US. The US dollar was seen trading flat on the day.

Germany’s Inflation Rises 1.3% YoY

The latest inflation report from Germany showed that consumer prices rose 1.3% on the year ending May 2019. This was well below the ECB’s 2% inflation target rate. On a monthly basis, Germany’s inflation was up just 0.3%. The weakness in inflation is starting to build up expectations that the ECB will follow through with policy easing in July.

EURUSD Trades Flat Within Range

The currency pair was seen trading flat within the 1.1400 and 1.1339 level on Thursday. The consolidation within this range indicates a potential breakout in the near term. The bias remains mixed. A breakout above 1.1400 will confirm further upside bias while a close below 1.1339 could trigger a deeper correction in the EURUSD. We expect the EURUSD to test the next lower support at 1.1250 in such an event.

Crude Oil Holds on to Gains

Crude oil prices were trading flat on Thursday. The OPEC meeting is due to take place from July 1^st and 2^ndin Vienna, Austria. So far, the markets are mixed on whether the OPEC members will cut production even further. Preliminary reports suggest that OPEC members will maintain the production cuts currently in place.

WTI Crude Oil Likely to Consolidate Near $60 Handle

WTI Crude oil managed to clear the resistance level of 57.50 and is now trading close to the $60 price point. We expect oil prices to consolidate near this level into next week. With the rally in oil price, it is likely that the markets are already discounting the existing production cuts. Failure to expect a further production cut that would be bullish for oil prices could signal a possible move back to the $57.50 level of support.

Gold Holds Steady at $1400

Gold prices managed to rebound after price fell close to the $1400 an ounce level. The rebound in gold prices comes as investors wait for further catalysts. On the economic front, the first quarter GDP from the US was unrevised at 3.1%. Meanwhile, pending home sales rose 1.1% matching estimates.

Will Gold Continue to Rise Higher?

The precious metal retreated off the highs to establish support at the $1404 level. Gold posted a lower high on the rebound off the support level. Failure to post further gains could see gold once again easing back to the 1404 level. A break down below this level could signal further declines. The next support level is at 1354.00