News & Analysis

Dow slips for a 2nd day; USD shocks risk; GBPJPY lower for a 7th day; Bitcoin holding from 6200

Aug 10, 2018 | Market Updates

Upcoming high impact news:

18:30 GBP GDP – Manufacturing Production – Prelim GDP
22:30 USD CPI – Core CPI
22:30 CAD Employment Change – Unemployment Rate

Stocks ended mixed overnight with falls on the Dow Jones for a 2nd day. The Dow fell by 74.52, Procter & Gamble slipping 1.2%. The S&P500 lost 4.12 points as energy and financial sectors traded lower. The Dow and S&P500 traded in mainly flat sessions until late session declines pushed the indexes lower.

The Nasdaq added 3.46 post an eight-day winning streak lead higher by gains in Amazon and Apple. “The recent strength in equity markets is being driven by earnings and earnings have been superb,” said Terry Sandven, chief equity strategist at U.S. Bank Wealth Management. “So the move higher here has been warranted.”

Earnings -Nearly 90% of S&P 500 companies have reported quarterly results thus far. Of those companies, 76% have reported better-than-expected earnings. Overall, S&P 500 earnings for the second quarter are up more than 24% versus the year-earlier period. – CNBC

Trade tensions – continued to simmer throughout this earnings season, however. Beijing announced Wednesday it would counter the most recent round of U.S. tariffs with its own. The Chinese Ministry of Commerce announced a 25% charge on $16 billion worth of U.S. goods. In total, 333 goods have been picked out by China, including vehicles, fuels, recyclables and fibre optic cables.

European stocks mixed in a reverse of yesterday the FTSE lost 34.88 and the DAX added 42.57. Retail stocks rose during afternoon adding 1.3%, while the oil and gas sector dropped 0.8% amid growing geopolitical tensions. Adidas also outperformed following its earnings report. Shares in the sportswear company closed 9.4% higher. Security firm G4S fell close 7.8% in the red after reporting a fall in its first-half profit.

Oil finished slightly lower but remains flat, price hanging around 66.10 support. Trade worries continue to weight on the market. Gold edged lower losing 1.80 after the USD gained momentum late in the session. Resistance remains from 1216.

The USD picked up momentum into the NY session as investors bet global trade tensions and a robust U.S. economy would continue to support the currency.

The greenback has the upper hand in a trade war scenario over emerging markets, analysts said, and tariffs may actually narrow the U.S. trade deficit. Risk majors fell the USD the EURUSD lost 82 pips and the AUDUSD fell by 58 pips closing back in .73 handle.

The NZD tumbled after the Reserve Bank of New Zealand said is committed to keeping interest rates at record lows through to 2020 on disappointing economic activity. This caught traders off guard, the NZDUSD fell by 131 pips to new 2018 lows at .6610. The JPY increased to the majors. The GBP closed lower to the JPY for a 7th straight session.

Bitcoin held gains yesterday closing back above 6500. Early signs but good signs buyer look to be building a low. We would like to see 6200 continue to hold as a low.

Traders will be looking to tonight’s key data coming out in the UK (GDP & Prelim GDP) and in the U.S (CPI & Core CPI).

Good trading from Eightcap.

Sources; CNBC – All times are AEST

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