News & Analysis

Trade focus continues -S&P500 hits 2900; USD mixed gains after Consumer Confidence; Traders looking to Tonight’s GDP; Bitcoin back above 7K

Aug 29, 2018 | Market Updates

Upcoming high impact news:

22:30 USD Prelim GDP EXP 4.0%
00:30 OIL Crude Oil Inventories

U.S markets made slight gains in Wednesday’s session, the S&P500 hit 2903.77 at its session peak before pulling back to close at 2897.52 a new record close. The Nasdaq also continued its record killing run hitting 8046 before pulling back to close at 8030.04. Apple gaining 0.8% supporting the Nasdaq’s gains. The Dow Jones added 14 pts.

Nicholas Colas, co-founder of DataTrek Research, said in a note the recent breakout is “a function of a baseline assumption (further corporate earnings growth and low rates) and a fresh input (a US Mexico trade deal means other trade/tariff negotiations are also likely).” “Trade has been the biggest overhang on US stocks, so the latter point has some runway to shove large caps even higher in the near term,” he said.

Treasury Secretary Steven Mnuchin told CNBC’s “Squawk Box” on Tuesday he is hopeful a deal with Canada will get done but added he is prepared to “move forward with Mexico.” Mnuchin also said: “This is a great deal for American workers. If you remember one thing, this deal is about more trade for U.S. companies and goods and services, and that’s what we’re focused on.”

Consumer confidence rose in August to its highest level since October 2000.

European markets ended the session mixed looking to the current trade developments, the DAX slipped 10.89 pts and the FTSE added 39.73. Miners outperformed supporting buyers, mining companies Evraz, Anglo American, BHP Billiton were top performers, with Kaz Minerals being the group and the STOXX 600’s biggest gainer, finishing the session up 8.4%. British Trade Secretary Liam Fox told CNBC the U.K. is looking to secure a trade deal with the U.S. as “quickly as we can.” The U.K. is looking to woo other trading partners as it gears up to leave the European Union in 2019. – CNBC Trade and tonight’s US GDP will be focus points for traders.

Oil slipped overnight as traders took profits pre EIA crude inventory numbers which are due out at 00:30 tomorrow morning. Buyers found support from the US Mexican trade deal that removes some uncertainty. Traders are looking for a -0.7M stockpile figure. USOUSD closed 46 cents lower at 68.34. Traders tested $69 but buyer ran out of demand around that price. We’re watching $69 as it has formed resistance on the 4H chart.

Gold edged lower in last night’s trade closing the session 10.70 lower after U.S treasuries picked post U.S. Mexico trade deal. “The main trade dispute, meaning U.S.-China conflict, is still going on so this NAFTA deal is just a small aspect,” said Commerzbank analyst Daniel Briesemann. Net short positions in COMEX gold contracts increased for a sixth straight week to a new record.

The USD ended mixed to risk majors by sessions end but hit one month low’s during the day. Higher than expected consumer confidence gave the Greenback a boost during the NY session. Ongoing trade and the Fed continue to be the main driver. The U.S. currency has fallen for three straight weeks, down nearly 2%. “The weakness in the buck was the result of relief risk-on flows after the U.S. completed a trade deal with Mexico, indicating that the Trump administration will be willing to negotiate with Canada and Europe as well,” said Boris Schlossberg.

The AUD and GBP finished lower to the USD but the EUR continued to trade higher, adding 20 pips after testing 1.1735 during the day. The EUR rally continued to the crosses +30 to the Yen, +50 to the AUD and +35 to the GBP. The EURGBP closed and fresh highs for the fourth day in a row getting closer to .9100. As to the USD risk ended mixed to the JPY, the GBP and AUD lost losing ground. The USDJPY added 13 pips. The USDCAD lost 35 pips but fought back from sessions lows that test May price levels. Traders will be looking to tonight’s US prelim GDP data due out at 22:30 the markets are looking for 4% growth in the U.S economy.

Bitcoin charged higher yesterday adding 350 USD and closed back above 7000. Traders keep an eye on 7130 as this is the beginning of the AUG gap and could offer resistance.

Good Trading from Eightcap

Sources; CNBC – All times are AEST

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