Chinese retaliatory tariff threat comes as a fresh blow to market underpinning market bears fundamentally, US macro data in focus for short term directional cues.
Summary: Global finance market is seeing bears dominate price action on geo-political cues influenced momentum. Latest headlines indicate China is threatening the US with counter-tariffs on US goods if the US government proceeds to impose additional tariffs on Chinese goods. This caused risk aversion to remain strong in the market. While the news influenced some level of declines, the market suffered a steep loss in the previous session, and declines were relatively capped in today’s trading session.
In Asian markets, aside from Chinese benchmark indices, all other major indices and equities suffered sharp declines in trading session today. European markets opened on subdued note over cues from China’s counter tariff threats which provided market bulls with yet another major blow. But bears have exhausted themselves, post the previous session declines, keeping the decline in check albeit key indices, stocks, and F&O’s trading in red today. In the forex market, USD weakness influenced rally offset risk-averse investor sentiment, causing major global currencies to trade positive.
Precious Metals: Precious metals are continuing to trade with positive momentum today. However, profit booking activity post previous session’s gains had caused gold and silver to decline from the week highs albeit price remaining stable above critical levels underpinned by sentiment from US recession woes.
Crude Oil: Crude oil price continues to trade with dovish bias in the global market. After several weeks, US weekly inventory data is showing contradictory results for the first time as EIA stockpile showed build while API stockpile showed draw in inventory. Meanwhile, recession woes hint at low demand for crude oil consumption offsetting supply-demand dynamics causing the price to remain dovish.
USD/JPY: The pair is trading flat today as US Dollar has managed to ease the dovish pressure during Asian and early European session today. But US T.Yield inversion heading towards record lows keeps USD under pressure while safe-haven demand underpins JPY. A lack of strong bias on either side keeps pair trading range-bound ahead of US market hours.
On The Lookout: Investors are now watching headlines for progress in geo-political events awaiting fresh updates for short-term profit opportunities while holding back from placing major bets owing to the highly volatile nature of the market. Tensions surrounding Sino-U.S. trade war is at all-time highs following China’s threats to US hinting at retaliatory tariffs on U.S. goods while there are also rumours in the market about Trump initiating a dialog with Xi Jinping while no concrete update on the progress of such an occurrence has been made public as of yet.
On the release front in late European/early North American market hours, traders await release of US core retail sales data, Philadelphia Fed Manufacturing Index data, Initial Jobless Claims, Non Farm Productivity data, Unit Labor Costs, and Industrial Production and Business inventories data from US calendar and ADP Non Farm Employment change from Canadian calendar.
Trading Perspective: USD weakness driven price rally is going to keep major global currencies trading in red unless macro data outcome has major impact enough to offset USD’s weakness from US T.Yield curve inversion. On earnings calendar in US market hours, Wall Street is set to see a financial report from Nvidia and Wallmart. US stock and index futures trading in the international market is trading with dovish bias over Chinese threat on retaliatory tariffs hinting at dovish activity in US Wall Street later today.
EUR/USD: The pair is trading positive in the global market today as EURO gained support from USD’s weakness, Italian market holiday and neutral macro data. The pair has managed to reverse previous sessions’ decline and is holding steady around mid-1.11 handle awaiting US macro data for fresh trading cues and short term profit opportunities.
GBP/USD: The pair is trading positive in the global market today having managed to reverse most of the declines from the previous trading session. The pair is now trading slightly below mid-1.21 handle with GBP bulls further supported by positive retail sales data from UK and USD weakness while Brexit woes keep gains in check. Traders now await US macro data for fresh trading cues and short term profit opportunities.
USD/CAD: The pair has declined from weekly tops scaled in the previous session but remains well above 1.33 handle. Crude oil’s weakness continues to pressure commodity-linked currency Loonie causing USD to trade positive despite weakness stemming from US T.Yields inversion keeping gains in check on recession fears. Traders now await US macro data for fresh trading cues and short term profit opportunities.
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