ZFX: Markets turn back to cautious risk-on mode before the holiday

Stocks in Asian markets are trading higher on Thursday, Christmas Eve. Overnight, the sentiment over the Wall Street was mixed, of which the Nasdaq dropped 0.3%, despite the hopes of the Brexit deal. It is reported that the UK and the EU will reach an agreement in the Brexit trade deal talk, so called “imminent”.

In the FX market, Sterling jumped to 1.35 level against dollar as investors bet on the Brexit deal, that can avoid a market chaos next year of the UK’s economy. The euro also strengthened to 1.22 level. On the other hand, the safe-haven dollar is weakened due to the general bullish outlook of the global economy.

The dollar index is trading above 90 level where it is a very important technical support. Analysts believe that it may be a further downtrend if there is a breakthrough of 90 for the dollar index. Like Sterling, most of the comments said that 1.38-1.4 target is highly possible.

While the economic data was mixed in the US, some optimism was boosted as President Trump requested the lawmakers to review the stimulus bill. Trump wants to change the coronavirus aid payment to $2000 to each American, far more than the proposed amount of $600 before. Such policy will definitely push up the commodity prices, like gold and oil.

Gold price was good on Wednesday and steadied on Thursday around $1870 level as investors now is balancing the risk-on mode and the inflation expectations over next year.

Oil prices extended gains on Thursday. The overall news in the market lifted demand hopes, like the UK-EU deal, Trump’s revision of the stimulus bill. The WTI bounced back to $48 area, regaining the lost earlier due to the worry of the severe coronavirus pandemic in Europe and the US region.

Main markets in Europe and US will close early for Christmas Eve.