Asian indices finished lower for one more day as President Trump vowed to impose a 5% tariff on Mexican imports until that country stops immigrants from entering the U.S. illegally. The Nikkei225 finished 1.63 percent lower to 20,601 below its 100-day moving average; the Hang Seng benchmark in Hong Kong finished 0.59 percent lower at 26,959. The Shanghai Composite finished 0.03 percent lower to 2,904 below the 100-day MA, while in Singapore, the FTSE Straits Times index finished 0.80 percent lower to 3,118. Australian equities closed down 47 points or 0.74% to 6,392. Losses from healthcare, property, energy, and mining stocks are weighing most heavily. The US market is down 5.5 percent in May, shares in Hong Kong have lost 8 percent, Japan is down 5.5 percent and France has been a laggard in Europe, slumping by 6.5 per cent.
European session started lower today as trade war intensifies across the globe, and news that EU is preparing to launch EDP against Italy in June. DAX30 is giving up 1.37 percent to 11,738, CAC40 is 0.99 percent lower at 5,196 while the FTSE MIB in Milan is trading 1.28 percent lower at 19,692. The London Stock Exchange is down 0,90 percent to 7,153 as traders are increasingly concerned over the impact that the ongoing trade dispute is having on the global economy.
In commodities markets, crude oil plunged to 58.84 as Saudi Arabia is likely to lift prices for all crude grades it sells to Asia in July for a third straight month, and an industry report showed a decline in US crude oil inventories that exceeded analyst expectations. Brent oil also trades lower giving up 5 dollars to $64,49 per barrel as major oil producers have yet to agree on adjustments on output. Gold made a jump today to 1294.60 zone: the highest level since May 16 after President Trump slapped 5% tariffs against all imports from Mexico. The precious metal broke above all major hourly moving averages turning the technical picture to bullish. Gold will find support at 1272, the low from the previous week, while more bids will emerge at the 200-day moving average at 1255. On the upside, resistance stands at 1296, the 100-day moving average.
In cryptocurrencies market, bitcoin (BTCUSD) lost over 300 dollars breaching the 50 and 100-hour moving averages, down to 8,253. The daily low for BTC was at 7,954 and the daily high at 8,485. Immediate support for BTC stands now at the $8,000 round figure. On the upside, strong resistance stands at 8,845 the recent high. Ethereum (ETHUSD) also slumped 30 dollars to 251. On the upside, the immediate resistance stands at 287, the recent high, while the support stands at 200 round figure. Litecoin (LTCUSD) also trades lower at 105.70. The crypto market cap holds above $174.0B.
On the Lookout: Trump intensified his global trade war and announced an additional 5% tariffs on imports from Mexico. Mexican central bank (Banxico) board member Jonathan Heath tweeted that “this is a game changer.” Huawei, “has ordered employees to cancel technical meetings with US contacts and repatriated Americans working at its Shenzhen headquarters.”
In the America economic calendar, we await the US Core PCE price index, personal spending, Canadian GDP, and industrial figures at 12:30GMT. Later in the session, the US UoM consumer sentiment index and Baker Hughes oil rigs count data will hog the limelight at 14:00GMT and 17:00GMT respectively.
Trading Perspective: In fx markets, the MXN is the biggest loser as it falls to two-month lows against the USD. USD/MXN is closing in on a test of the March highs at 19.62, and if that gives way, there isn’t much stopping a run higher in the pair especially if this trade war escalates further in the coming months. The US dollar trades lower at 97.95 while the Aussie dollar gives up 10 cents to 0.6922. Kiwi on the other hand trades flat to 0.6522 level as New Zealand has cut its budget surplus forecast for 2019/20 to NZD1.3bn.
GBPUSD consolidates around 1.2622 as the bearish momentum for Cable is still intact amid growing concerns over Brexit. The pair hit the daily low at 1.2598 and the daily high at 1.2624. Major support now stands at 1.26 recent low. On the upside, immediate resistance now stands at 1.27, the high from Asian session, while more sellers will emerge at the 200-hour moving average at 1.2713. Sterling shows persistent weakness amid UK political uncertainty and also on the back of global risk aversion.
EURUSD started higher the European session at 1.1143 amid early USD weakness. The pair is losing the bullish momentum build last Friday and now looks bearish and an attempt down to 1.11 YTD low looks possible. On the upside, the immediate resistance stands at 1.12, the high from Tuesday, while more offers will emerge at 1.1245, the 50-day moving average. We are following news from Italy as their budget deficit dispute with the European Commission continues, and the political turmoil in Austria and Greece
USDJPY slumped below 109 to fresh four-month lows as traders are looking for safe-haven assets. Today the pair hit the low at 108.75 and the high at 109.61. The pair will find support at 108.50. On the upside, immediate resistance for the pair now stands at 109 and then at 109.45, the 50-hour moving average.
USDCAD continues its move above the 1.35 as the retreat in crude oil prices, Canada’s main export item, seems to have added further weakness in the Canadian Dollar (CAD). The pair will find immediate support at the 50-day moving average around 1.3392 while extra support stands at 1.3300 round figure. On the upside, immediate resistance stands at the 1.36 zone before an attempt to YTD high.