Trump legal issues kills investor appetite

Daily Analysis - 24/08/2018

Stocks fall as worries about US-China trade

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Yesterday Stocks went down due to an ongoing trade war between the U.S. and China. Also renewed legal issues for President Donald Trump kills investor appetite. Caterpillar fell 2% and Boeing 0.7 %. Deere shares dipped 1%. The tech shares Alibaba fell 3.2% and Netflix went also down 1.5 %. The tariffs that the US put $16 billion worth of Chinese import-product categories took effect yesterday. China struck pack with its fresh tariffs on $16 billion worth of imports. The talks between China and the US held on Wednesday and continued since yesterday. Investors and speculators dint have any hopes after the US President Trump said he did not "anticipate much" to be resolved, in an interview with Reuters. Kate Warne, investment strategist at Edward Jones said "I think there's disappointment that the tariffs came into effect today, and added “Given the restart of the talks, there was some hope that those would be delayed. “Another factor that stocks feel probably is Trump's legal troubles. Trump's former personal lawyer, Michael Cohen, pleaded guilty to eight counts related to tax fraud yesterday. Cohen also admitted that he pay to two women for Trump. Labor Department said despite the trade worries of US and China Weekly jobless claims slipped by 2,000 to 210,000 last week.

Australian dollar rallies


The Australian dollar gained almost 0.5% on Friday. That cover the previous losses that created after the ruling Liberal party voted in a new leader. By doing that they stopped the political crisis that drove down investors’ confidence. Barclays strategist Shinichiro Kadota said "The Australian dollar rose just as much as it shed quite a lot over the past week due to domestic political uncertainty," The new prime minister will be Treasurer Scott Morrison due to the fact that he won a three-way battle for the leadership of the Liberal party on Friday. The AUDUSD fell 1.4 % on Thursday and became the worst performing G10 currency, after the lowest level of support since January 2017 of A$0.7202 last week. The fall was affected by the country’s political uncertainty. The US Dollar stayed at the recent gains after U.S. and Chinese officials ended two days of trade talks without any positive outcome. The Aussie went up about 50-pips as the Australian political tensions eased. On the 1h timeframe, the support level is at 0.7240 as the price now is at 0.7278 and the next resistance is at 0.7288.

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European stocks seen mixed


The chair of the U.S. Federal Reserve Jerome Powell will speak today and European stocks are mixed for the time been. The FTSE 100 is now down by 6 points at 7,552; the DAX 30 is probably open higher by around 13 points at 12,378, and the CAC 40 is up by 4 points at 5,434. Fed chairman Powell is will talk at 10 a.m. ET. It is very interesting to see the chairman’s statement after recent comments from President Donald Trump that he wasn't thrilled with the work of the central bank. Now investors are also taking the news in serious consideration that trade talks between the two economic giants China and US ended Thursday without any real progress on the same day that new tariffs began. Now FTSE-18 is in a range for the time being between 7599.07 and 7517.62 any potential opportunity will probably rise after these levels. In Europe, little after the European Central Bank meeting showed that a global trade war are probably the biggest risks to the euro zone growth.

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GBPUSD stabilizes for now


UK government is taking steps to prepare the public and companies for a probable no-deal Brexit scenario. And anyone can imagine that these steps and preparations are triggering concern in all over the market. On the other hand, UK Brexit Minister Dominic Raab was more on the positive side that they will reach a "good deal". The GBP/USD is trading above 1.2800, stabilizing after a significant drop on Thursday. The Greenback is taking a break in its rally because of the Fed Chair Powell's speech at Jackson Hole. Concerns about a no-deal Brexit was the main news on the Pound on Thursday. Technically, all seems the same for the pair, besides yesterday's decline making sure that the recent up-move, that we saw over the past one-week or so, was, in fact, a corrective bounce. Still, the bears are in the lead.  A weakness below the 1.2800 could give a more negative outlook and the bears can gain more confidence to move lower.

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