The dollar took a defensive position
The us dollar took a defensive position, and the stock markets are experiencing a rally after the US and China announced a truce in the trade war. The parties agreed not to introduce new tariffs and attempt to reach agreement in the next 90 days.
The blue-chip index of Shanghai stock exchange China A50 adds more than 3% at the start of trading, the Hong Kong Heng Seng is growing at 2.7%. Futures on the us S&P500 up 2.5%, which marked the expansion of the growth over the past 10 days to 6.8%.
The dollar fell back to one month lows against the Chinese yuan, lost since the beginning of the day on Monday 0.7%. Oil adds more than 5%, rising to $62 a barrel and Brent to $53.4 for WTI. Additionally, oil is spurring expectations of production cuts in the new year, following the meeting of OPEC and other major exporters.
Investors chose to focus on positive signals. In particular, on the fact that in the next 90 days is not assumed new mutual tariffs, which are shares of Chinese companies fell in the preceding weeks. In the end, the China A50 index was at the lower end of the range the last 5 months, under the 11,000 mark. In the development of positive momentum, the index may not meet significant resistance until the upper bound of this range at 11,800.
S&P500 will undergo a big test yet. During a breakthrough on Monday, the index has crossed the 200 – and 50-day moving averages, which is a strong signal of growth on the part of technical analysis. Right now futures are at level 2810, near which the index has unfolded to decrease in October and November. Ability to consolidate above will reflect positive market sentiment and open the way to the growth of the S&P500 directly to the area of the highs of October.
The U.S. currency will undergo no less important check. The dollar index this morning is down 0.5%, testing the support area of the upward trend. The growth of demand for the risks in connection with expectations of a breakthrough in trade negotiations, as well as the easing tone of the fed, are significant factors in favor of breaking the uptrend.