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 

* The information provided here has been prepared by EightCap’s team of analysts. All expressions of opinion are subject to change without notice. Any opinions made may be personal to the author and do not reflect the opinions of EightCap.

In addition to the disclaimer on our website, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. EightCap accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently, any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication.

Please note that past performance is not a guarantee of or prediction of future performance. This communication must not be reproduced or further distributed without prior permission.

 

 

 

 

 

HEAD OFFICE

Level 6, 360 Collins Street
Melbourne, VIC
3000 Australia

Risk Warning: Margin trading involves a high level of risk, and may not be suitable for all investors. You should carefully consider your objectives, financial situation, needs and level of experience before entering into any margined transactions with EightCap, and seek independent advice if necessary. Forex and CFDs are highly leveraged products which mean both gains and losses are magnified. You should only trade in these products if you fully understand the risks involved and can afford losses without adversely affecting your lifestyle (including the risk of losing substantially more than your initial investment). A Product Disclosure Statement (PDS) and a Financial Services Guide (FSG) for our products are available to download from our Legal Documentation page. You must assess and consider them carefully before making any decision about using our products or services.

EightCap is a registered business name of EightCap Pty Ltd (ABN 73 139 495 944). We are regulated by the Australian Securities & Investments Commission (ASIC) - our AFSL number is 391441. This licence authorises us to provide financial services to people in Australia.

The information on this website is of a general nature only and is not directed at residents in any country or jurisdiction where such distribution or use would be contrary to local law or regulation. EightCap is not a financial adviser, and does not issue advice, recommendations, or opinion in relation to acquiring, holding or disposing of a margined transaction. We provide general advice only and accordingly you should consider how appropriate the advice (if any) is to your objectives, financial situation and needs before acting on the advice.