Quiet start but risk appetite remains supportive

Trade talks resume in Washington as progress towards extension continues

It’s going to be a relatively quiet start to the week, with market closures in the US and Canada typically weighing heavily on trading activity, data and news flow.

Stocks in Europe are expected to open a little higher on Monday, continuing the bullish trend as risk appetite continues to be supportive. Signs of progress in trade talks between the US and China is an important factor, with negotiations set to continue in Washington this week as both sides seek to avoid further tariffs when the truce expires later this month.

An extension looks the most likely outcome, with 90 days just not enough time to reach a comprehensive deal. Trump has indicated that he could support an extension despite claiming to like tariffs during his press conference on Friday, something that will comfort investors at a time when global growth concerns are posing a significant risk for markets.

Markets in long-weekend slumber

Gold breaks $1,320 as trade talks weigh on the dollar

The dollar has lost some of the appeal that saw it rebound strongly this month to trade back near the highs from late last year. The dollar is sensitive to a variety of developments right now and trade talks are one of them, with progress having previously being a headwind for the greenback having accelerated its gains as tariffs were imposed last year.

Gold Daily Chart

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Softness in the dollar is good for gold though which has rallied to just above $1,320 on the first sign of weakness. The rally has held up around the same levels it did at the end of January, although this may just prove to be temporary resistance, with the market looking quite bullish on gold right now.

Daily Markets Broadcast 2019-02-18

Oil breaking major resistance could be bullish catalyst

Oil is another that is benefiting from a weaker dollar, with WTI and Brent now trading slightly above major resistance around $55 and $65, respectively. Should this hold, it will be a very bullish signal for oil and could be the catalyst for another push higher.

For a look at all of today’s economic events, check out our economic calendar.

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