Trade war is here to stay

Daily Analysis - 24/05/2019

Investors believe that trade war will get worst

On Thursday while stocks fell, popular firms started to worry that the U.S will slap China with tariffs on all Chinese goods. If this happens then we will face an escalating and a renewed trade war that could start hitting customers and slow the global growth.

Yesterday the Dow dropped more than 400 points at its lows while the U.S. and China seemed to hold their positions. No new discussions are scheduled. China cautioned the U.S. to act with “sincerity” and change its “wrong actions.” Many firms published reports suggesting that the trade war is getting worse including strategists and economists from Goldman Sachs, Bank of America and others.

Gold is strong

On Friday the popular save-heaven Gold was steady following surging over $1,280 in the last trading session. That was while soft U.S. numbers drove the greenback off its two year tops and crushed anticipations of a rate cut by the FED this year. U.S. gold futures for June fell about 0.2% at 1,283.09

Spot gold held constant at $1,283.53 per ounce after climbing more than 1% to a seven day top of 1,287.22 in the last session. The Head of dealing at Wing Fung Precious Metals Peter Fung said that

“Gold has found very good support around $1,270. There was some short covering after the (weak U.S.) data that pushed prices up. However, the upside could be limited as $1,290 is acting as a strong resistance”.

Greenback falls from its 2-year top

On Friday the popular greenback retraced registering a small weekly decline and leaving its two-year highs behind on lower U.S. yields. The retrace came as investors worried that the China-U.S. trade conflict will damage the U.S. economy more than previously believed.

Versus a box of key competing currencies, the dollar index was mostly stable at 97.877, having dropped from a 2-year top of 98.370. That placed the greenback on track for a 0.12% decline this week.

The chief currency strategist at Mizuho Securities Masafumi Yamamoto stated that due to U.S.-China trade tensions, “markets are pricing in the potential negative impact” on the U.S. economy.

Main Asia markets dropped

On Friday morning Asia Pacific exchanges remained mostly in the negative area while traders continued to be concerned covering trade tensions between China and the United States.

Mainland Chinese exchanges mostly fell, with the Shenzhen composite falling almost 0.4% and the Shanghai composite in negative area. Hong Kong’s Hang Seng index went up 0.13%.

In Japan, the popular Nikkei 225 cut some declines from earlier, dropping 0.57% while the Topix index fell more than 0.20%. South Korea’s Kospi was fell almost 0.60%.

Upcoming Events

Time
Currency
Event
Forecast
Previous

08:30 GMT
GBP
Retail Sales (MoM) (Apr)
-0.30%
1.10%

12:30 GMT
USD
Core Durable Goods Orders (MoM) (Apr)
0.20%
0.20%

Ready to trade
Open Account
Share:
Next: Huawei will fight back