EU premarket: risky assets give way, cash flows look for direction

Cash flows in the early hours before the European session suggest that we will have a weaker opening than yesterday’s levels and do not indicate the expected risk on sentiment.

I mention expectations because the terms of the Phase I Deal have become clear, which include the purchase of manufacturing and agricultural American goods by China, and China is no longer declared a currency manipulator. More details remain, the translation of the agreement is ready and the deal itself is expected to be signed tomorrow.

However, with this we have more “sell the fact” than new rally. We expect to confirm the final amount by which tariffs will be reduced and when exactly this will happen and possibly more clarity and information on the next step between the two countries.

However, the outflow of risky assets does not lead to the expected effect on the defensive assets. The Japanese yen, Swiss franc and gold are inferior as well as oil.

Market players are also adjusting to the US corporate reporting season, which begins today, led by three of the largest US banks.

Today, I expect the session to be rather cautious precisely because of the events listed above, all of which will depend on their development.

Today, in the economic calendar, we have such important data on US inflation and preliminary data on oil inventories.

 Trader Martin Nikolov

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