Market News & Analysis

Trump trade comments hit futures lift Yen

May 6, 2019 | Market Update

High-impact economic news:

03:45 am CAD BOC Gov Poloz Speaks 

Bank Holiday – UK all day. 

After much better than expected U.S employment data on Friday lifted stocks. Friday saw payrolls come in at 263K, and unemployment dropped to 3.6% its lowest since 1969. Average earnings missed expectations coming in at 0.2% this had a negative effect on the USD. 

These morning traders had to deal with shock comments from President Trump, basically throwing a spanner in the works of what has been until now a mainly positive run in Chinese-U.S. trade negotiations. A deal looked closer than ever based on comments coming out last week. This morning President Trump tweeted;

“For 10 months, China has been paying Tariffs to the USA of 25% on 50 Billion Dollars of High Tech, and 10% on 200 Billion Dollars of other goods. These payments are partially responsible for our great economic results. The 10% will go up to 25% on Friday. 325 Billions Dollars….” – “….of additional goods sent to us by China remain untaxed, but will be shortly, at a rate of 25%. The Tariffs paid to the USA have had little impact on product cost, mostly borne by China. The Trade Deal with China continues, but too slowly, as they attempt to renegotiate. No! 

This hardline tone sent U.S stock futures sharply lower the Dow was jolted 450 pts into the red. The SPX500 which ended the week 29.80 pts higher opened 41.43 points lower and quickly lost a further 23.73 points before trimming some loses. The big question, will this derail the current rally or will we see the markets absorb this shock? 

Currencies took the news a little better but the AUD and NZD took a beating to the USD, the AUDUSD opened 55 pips lower and the NZDUSD opened 43 pips lower. The JPY was the big winner after the tweets jumping to the majors. The USDJPY dropped to 6-week lows hitting 110.27.  FX markets remain volatile today, buyers have trimmed some loses. The GBPUSD opened 30 pips lower after Friday’s 150 pip surge. 

What we’re watching today/tonight is how this is dealt with, is this a true momentum-changing event? With no key U.S session data or news, this should be tonight’s main market influence. 

US30 daily chart, what a wild 24 hours for traders to deal with, from 234 pts higher to 511 pts lower.

Good trading from EightCap

Sources – CNBC – CNN image 

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