Market Remained Sceptical Towards Trade Optimism, Brexit.

Gold rebounded from its lower levels on Monday following reports that China demanded more talks to be scheduled before signing President Trump’s Phase 1 deal. Trump on Friday said that he is willing to sign a Phase 1 deal and continuing with Phase 2 and 3 following progress in trade negotiations, with China buying more US agricultural product and taking measures on its intellectual property and its currency manipulation, whereas the US maintaining tariff at 25% as a sign of goodwill. However, with China asking for more trade talks before willing to sign, would only delay trade talks longer, thus, extending market uncertainties.      
 
The dollar index was slightly higher on Monday, still being pressured by investors’ shift in the portfolio into riskier assets. The greenback struggles around its 98.00 level while investors wait for further market sentiment. As of now, market participants are betting on a 25-basis point cut close to 70% during Fed’s October interest rate decision, according to the Fed Rate Monitor Tool. Despite the previous compliment by the Fed towards US inflationary status, recent inflation data, namely CPI and PPI, failed to convince investors.     
   
Oil prices recorded more than 2% loss on Monday, giving up most of its gains from last week’s market. The market underwent a quick change in sentiment after China requested for more talks to be held before signing a Phase 1 deal with President Trump, lowering investors’ confidence towards the black commodity. As global supply still remains high, and manufacturing sectors still contracting, oil bulls can only depend on trade optimism to prompt up crude price. In other news, the recent attack on Iranian oil tankers near Saudi Arabia was claimed as the work of Government, instead of a terrorist. However, tensions in the Middle East still failed to kept oil prices higher.     
 
The pound sterling still holding on to its gains amid Brexit hopes. With just days before the EU council meeting, Finnish PM stated that more time is needed, and Brexit negotiations must continue even after the meeting. According to reports, hope for a Brexit deal rose as last-minute compromises are made. Although no precise details regarding the proposal surface in the market, efforts from both sides to prevent a no-deal Brexit scenario still wins over investors’ expectations that a deal can be achieved. Furthermore, ruling out of a no-deal situation by the Parliament put Brexit in two higher possibilities outcome, one being the extension of Article 50, which means further delay in Brexit date, while the other is successfully reaching a deal by October 31.