Sino-U.S. trade talks

Asian Equities Down, USDJPY Trades Below 110.00

Asian markets were under selling pressure for one more day following negative signs on Wall Street overnight after comments by the US President Trump on trade, citing that “China broke the deal” on the trade talks that sparked worries about a breakdown of trade talks between China and the US.

The Nikkei225 lost 0.92 percent to 21,404, the Hang Seng benchmark in Hong Kong finished 1.72 percent lower at 28,498. The Shanghai Composite lost 1.16 percent to 2,862, while in Singapore, the FTSE Straits Times index finished 0.32 percent lower at 3,273. Australian stocks bounced off intraday lows, mainly thanks to a bigger than expected lift in imports. The ASX200 ended the session down 26 points or 0.4% to 6,269.

In commodities markets, crude oil consolidates at 61.67 as investors eyes turn to geopolitical tensions. Brent oil is trading at $69,86 per barrel. Gold holds the 1800 figure and trades 0.10 percent higher at 1282 level. XAUUSD technical picture starts to improve, and now the support stands at the 200-day moving average down to $1251, which if broken can accelerate the downward move to 1200 as sellers will take full control. Strong resistance stands at 1293 and the 100-day moving average, and then the $1300 round figure.

BTCUSD Hourly (H1) Chart

In cryptocurrencies market, Bitcoin (BTCUSD) whose market capitalization accounts for more than half of all other cryptocurrencies breaks above the 6,000 resistance as bulls are in the driver’s seat. The daily low for BTC was at 5,824 and the daily high at 6,081. BTCUSD’s immediate support stands at the 50-hour moving average at 5,869 while next strong support stands at the $5,759 level, the 100-hour moving average, and then at the 5000 round figure. On the upside, strong resistance stands at 6,081 the recent high before. Ethereum (ETHUSD) underperforms and gives up 5 dollars to 169 but holding well above the 50-day moving average at 138. The immediate resistance stands at 185, the 200-day moving average, while Litecoin (LTCUSD) trades flat at 73.70. The crypto market cap holds above $172.0B.

On the Lookout: Chinese negotiators are heading to Washington for trade talks today. The Japan Consumer Confidence Index registered at 40.4 above expectations (40.3) in April. In the UK, PM May promises a new vote on Brexit deal in next two weeks.   

The Reserve Bank of New Zealand (RBNZ) yesterday cut by 25 basis points its Official Cash Rate (OCR) to a new record low of 1.5% amid the weaker economic situation.

In the North Atlantic economic calendar, we have the key PPI, trade balance and weekly jobless claims, all of which will drop in at 12:30GMT, the US wholesale inventories data will be reported at 14:00GMT.

Trading Perspective: In forex markets, the US dollar index started on greens at 97.32 as traders digest the developments in US-Sino trade war. A stronger US dollar will likely increase the US trade deficit, adding risk that the Trump administration continues to target those nations with a significant trade surplus with the US (China – Germany – Europe). The Aussie dollar is trading at a yearly low at 0.6975 as the bears are in full control and the present decline can extend towards 61.8% Fibonacci expansion level of moves since April 23, at 0.6940. A break of that level can force prices lower to 2016 lows at 0.6920. Kiwi also trades lower to 0.6570 after RBNZ yesterday cut interest rates by 25 basis points.

GBPUSD continues lower today at 1.3016 amid Brexit uncertainty hitting the daily high at 1.3024 and the low at 1.2991. On the downside, major support will be found at 1.2960, and then at 1.2830, the support line from February. On the upside, immediate resistance stands at 1.3096, the 50-day moving average.

In Pound futures markets, the open interest dropped by just 2 contracts on Wednesday, reaching the third drop in a row while volume shrunk by around 1.2K contracts.

EURUSD trades for one more day above and below the 1.1210 figure after the dovish stance from Fed last week. The pair made the Asian high at 1.1198 and the low at 1.1185. Immediate support can be found at 1.1180, the 200-hour moving average, while more solid support can be found at the yearly low at 1.1115. On the upside, the immediate resistance stands at 1.1236, the bottom of the horizontal resistance line from the three-month trading range, while more offers will emerge at 1.1268 at the 50-day moving average.

In the euro futures market, open interest shrunk by nearly 3.2K contracts on Wednesday from Tuesday’s final 516,282 contracts. Volume rose for the second consecutive day, this time by almost 2.9K contracts.

USDJPY during the Asian session dropped below the 110 level for the second day as traders turn their eyes to safe assets amid renewed China-USA trade. Today the pair hit the low at 109.82 and the high at 110.10. The pair will find support at 109.82 the Asian session low. On the upside, immediate resistance for the pair stands at 110.61, the 100-day moving average, and then at 111.33, the 50-day moving average.

In Yen futures, the open interest rose for yet another session, this time by a modest 340 contracts. The uptrend in volume extended for the fourth session in a row, up by around 33.5K contracts.

USDJPY Daily Chart

USDCAD is the winner today adding 20 pips today at 1.3485 as weaker prices in crude oil, Canada’s main export item, seems to have added further weakness in the Canadian Dollar (CAD). The pair will find immediate support at the 100-day moving average around 1.3335 while extra support stands at the 1.3300 round figure. On the upside, immediate resistance stands at 1.3490, the Asian session high, while a break above can escalate the rebound towards the 1.35 round figure.