13 June 2018 ( Lagos ) : Financial markets have offered a fairly muted response to the historical Singapore summit, despite President Donald Trump describing it as being “fantastic” and “better than anyone could imagine”.
Global sentiment was initially elevated after the US President and North Korean leader Kim Jong-un signed a denuclearization agreement which eased geopolitical tensions. However, the lack of insight offered on the steps taken by both sides to reach this monumental goal left investors somewhat cautious. There is a suspicion that the muted reaction following the Trump - Kim summit could be based on investors guarding themselves against the unpredictability of the Trump administration.
Markets seem to be taking Trump’s words with a pinch of salt, especially when considering how he sowed chaos over the weekend, by pulling out of a joint statement with the G7 allies.
In the meantime, there may be a wait and see approach across financial markets until fresh details are provided by the United States or North Korea regarding the next key steps towards denuclearization.
Sterling softens as wage growth disappoints
The British Pound weakened against the Dollar after a mixed UK jobs report prompted investors to scale back expectations over the Bank of England raising UK interest rates this year.
UK wage growth unexpectedly eased to 2.8% from 2.9% during the three months to the end of April, while the unemployment rate remained unchanged at 4.2% - its lowest level since 1975. With the Pound partially driven by monetary policy speculation, fading expectations of the BoE hiking rates could drag the currency lower.
Technical traders could continue to closely observe how the GBPUSD behaves above the 1.3350 level. A failure for bulls to defend this level could result in a decline back towards 1.3300 and 1.3270, respectively. Alternatively, a decisive breakout above 1.3420 could elevate prices towards 1.3450 and 1.3530.
Commodity spotlight – WTI Oil
Oil prices have slightly eased today as investors positioned themselves ahead of the upcoming OPEC meeting next week.
The prospect of easing supply curbs from OPEC-led producers continues to be reflected in Oil’s overall depressed price action. With rising production from US Shale adding to Oil’s woes and reviving oversupply concerns, further downside could be a possibility in the short to medium term.
In regards to the technical picture, WTI Oil remains under pressure on the daily timeframe. Repeated weakness below $66 could encourage a decline towards $64.90 and $64.30, respectively.
Source: Lukman Otunuga, Research Analyst at FXTM,
Reporting for EasyKobo on Wednesday, 13 June 2018 from Lagos, Nigeria
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