Fresh US-China trade deal hopes

Daily Analysis - 04/04/2019

US Treasury yields went up


On Wednesday the U.S. government debt yields climbed while investors watched the latest progress regarding the ongoing U.S.-China trade discussions.

The yield covering the benchmark 10-year Treasury note went up fast to about 2.512%, while the yield on the 30-year Treasury bond rose to 2.92%. Chinese and U.S. executives are reportedly getting near to form a trade agreement. They have solved most of the ongoing problems in their long trade dispute. Both countries issued taxes on billions of dollars' worth of each other's products in 2018. China wants the U.S to withdraw any current U.S. tariffs on Chinese imports. Trump administration, on the other hand, requires China to agree to the implementation of a mechanism that guarantees the country abides by the agreement.

Yen eases due to trade optimism

On Thursday the popular yen relaxed a bit while the euro continued to be strong versus the greenback as the optimism of a trade agreement between the United States and China boosted risk desire globally. The sterling advanced following the UK parliament having supported a bill to seek a Brexit extension.

The safe-haven yen reached a 14-day low of 111.574 yen versus the greenback late yesterday. The pair were last valued at 111.40 yen.


Gold getting stronger while greenback weakens

On Thursday the popular yellow metal Gold increased, boosted by a weakening US dollar. Traders anticipated development covering the continuing China-U.S. trade negotiations. Reports also confirmed that both sides are coming closer to a deal. The U.S. gold futures firmed 0.1% at $1,296.89 an ounce. Spot gold climbed 0.2% to $1,291.88 per ounce.

Gold is usually viewed as a safe haven asset through periods of financial and political risks. A pause in the equities further supported the bullion.


Oil going lower after U.S inventories

On Thursday, Oil prices dropped with Brent moving away from the significant $70 level after weakening in the previous session upon data showing a surprise build in U.S. inventories.

Brent futures fell about 2 cents to $69.28. Yesterday, Brent receded 6 cents after touching $69.95. That level is highest since last year when it last traded above $70.

U.S. West Texas Intermediate (WTI) crude fell 14 cents to $62.33 a barrel. The contract dropped 12 cents in the previous session briefly hitting the $62.98 level.


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