New US tariffs on $16 billion of Chinese goods

Daily Analysis - 23/08/2018

Dollar sees gains while AUD Falls

On Thursday US Dollar got a nice bullish momentum as investors went back to the greenback due to a political problem in Australia. After the minutes of the FED latest policy meeting showed the U.S. central bank is still on track to further raise interest rates. The Aussie went down more than a 0.5% after the Prime Minister of Australian Malcolm Turnbull was shocked to witness the resignation of three senior ministers. The AUD went down about 0.8 % to $0.7293 and will probably reach the 19-month low at $0.72025.

Gold prices fall as dollar rises

On Thursday we had a decline in Gold prices after hitting their highest level in over a week in the previous trading session. One of the reason was the fears of another round of U.S. tariffs on China and the possibility of higher interest rates that lifted the dollar. Officials from US and China in over two months finally met. They actually wish to find a way to get out this dangerous trade war. As now there are no clues that the low-level talks could halt a new round of U.S. tariffs that are going into effect on Thursday. With the interest rates increasing the cost of holding non-yielding gold while the dollar gaining more bullish momentum makes the Gold more expensive. Fung said "The fear of rate hikes is also pressuring gold. Despite Donald Trump's recent attack on rising interest rates, we think the Fed may have its way, “and he added the $1,200 level is acting as a strong resistance for the precious metal.

China trade tariffs begin and the European shares Falling

Thursday morning Stocks in Europe are probably going open lower after China implemented new tariffs against the US. The DAX 30 is probably going to start off by 37 points at 12,348, the FTSE 100 is seen down by 20 points at 7,554 and the CAC 40 is seen off by 10 points at 5,411. Eyes are now on the Fed's economic symposium in Jackson Hole, Wyoming, which will begin on Friday. Many investors are anticipating to see any change in stance from the central bank. Angela Merkel is trying to get a German official to be the head of the European Commission. That means she is probably not going to support her central bank governor Jens Weidmann, who wished to become the next president of the European Central Bank.

International oil prices slip

The International oil prices went down on Thursday, and the reason was the escalating trade dispute between the US and China, even though the decline in U.S. commercial crude inventories offered some good support. The two economic giants the United States and China escalated their dangerous trade war on Thursday by implementing punitive 25% tariffs on $16 billion worth of the other's goods. In the U.S. In oil markets, a weakness in commercial crude inventories provided WTI with a much more important and stronger support than Brent. On Wednesday the Energy Information Administration stated that the U.S. commercial crude oil inventories went down by 5.8 million barrels in the week to Aug. 17 to 408.36 million barrels.