News & Analysis

New Tariffs – Trump worries hit stocks boost USD; AUDUSD sinks as political instability continues.

Aug 24, 2018 | Market Updates

Upcoming high impact news:

22:30 USD Core Durable Goods Orders
00:00 USD Fed Chair Powell Speaks

U.S markets traded lower on Thursday as U.S – China trade and building legal worries for president Trump hurt sentiment. The Dow Jones fell by 76 points led lower by falls in Caterpillar and Boeing, two bellwethers of global trade, both lost 2% and 0.7%, respectively, after additional U.S. and China tariffs come into effect. “I think there’s disappointment that the tariffs came into effect today,” says Kate Warne, investment strategist at Edward Jones. “Given the restart of the talks, there was some hope that those would be delayed.”

The S&P500 lost 4.84 as materials dragged and the Nasdaq lost 10.64. Wall Street also fretted over Trump’s legal troubles. The legal troubles have raised questions about whether Trump will remain in office. In an interview with “Fox and Friends,” Trump said: “If I ever got impeached, I think the market would crash. I think everybody would be very poor.” – CNBC

Weekly jobless claims slipped by 2,000 to 210,000 last week despite the ongoing trade worries, the Labor Department said. – CNBC. Tonight traders will be looking to Core Durable Goods Orders data and Fed Chair Powell when he speaks at Kansas City Economic Policy Symposium, in Jackson Hole.

European stocks drifted lower as due to U.S China trade escalating. Brexit worries also continue, newly appointed Brexit Secretary Dominic Raab released advice on “how to prepare” in case the country leaves the European Union without a deal. Businesses were warned to prepare for increased trade barriers, and consumers cautioned over higher credit card charges when purchasing EU products in the event of a “no deal” Brexit. Indexes in Europe – the DAX -20.12 the FTSE -11.02.

The USD snapped a 5-day losing streak overnight. The USD made good gains to the EUR and GBP and tearing the AUD 102 pips lower as it also dealt with ongoing political turmoil. The USD added 73 to the Yen and 88 pips to the CAD. The EUR gained on the crosses, jumping to the AUD and moving back above .90 to the GBP. Risk traded mixed to the Yen, the GBP lost ground the AUD dropped with due to negative clouds, and the EUR added 26 after testing yesterday’s lows.

“I think the market has been waiting for the moment to get back in (to the dollar),” said Neil Mellor, a strategist at BNY Mellon. “I’m still not fully convinced we have a sustained dollar rally here, especially after Mr Trump’s comments,” Mellor said, referring to President Donald Trump’s criticism of the Fed’s rate hikes in an interview this week with Reuters

Gold’s come back stalled sellers cutting $10 off recent gains overnight. A stronger USD the main reason for the selling.

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Sources; CNBC – All times are AEST

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