News & Analysis

Trade war fears ease driving stocks – Dow Jones adds 336.70; USDCAD continues surge hitting 1.2963; JPY falters majors recover; Data heavy day for the Aussie

Mar 5, 2018 | Market Updates

Upcoming high impact news:
Heavy new’s day for the AUD starting from 11:30 am
Ôû© Current Account – Retail Sales
Ôû© 2:30 pm Cash Rate – RBA Rate Statement

US markets – gained overnight as trade war fears receded, President Trump commented Tariffs on Steel and Aluminum will only come off if new & fair NAFTA agreement is signed,”. “If tariffs are announced but keep NAFTA partners in scope, this would break with recent precedent, given that the steel tariffs under President Bush did not apply to Canada and Mexico,” said Michael Zezas, managing director at Morgan Stanley, said in a note. “Markets may have to reflect some increase in the probability that NAFTA talks fail.” Other main stocks that added to last night’s bullish mood were; Caterpillar rising 3.2 percent and Harley-Davidson, a closely watched stock amid the tariff news, increased by 2.4 percent. The S&P500 added 29.26 and the NASDAQ added 72.84 to make it two in a row. The Dow Jones snapped a 4-day streak closing 336.70 points higher.

Oil – added 97 cents in last night trade closing above $62 dollars a barrel. $61 support held true for buyers after sellers made one decent test during the London session. $62.65 is showing some short-term resistance from the 1-hour chart this morning. Overall the higher low has confirmed. Abhishek Kumar, a senior energy analyst at Interfax Energys Global Gas Analytics in London, said comments about “Venezuela’s deteriorating oil-production profile, together with prospects for strong compliance with the OPEC-led output-cut agreement, (were) supportive of oil prices.”

European markets – bounced back on Monday, discounting political uncertainty in Italy and a 9.7% drop by AXA Europe’s second-largest insurer. As current trade tensions eased buying took off during the London session, the GER30 after making 192 drops recovered on the London open to close 144 points higher that hour. The DAX finished the session 177.16 higher the FTSE added 46.08 and the CAC closed 30.65 points higher.

Forex – mixed night to be honest, USD weaker to most majors but stronger to the JPY and CAD. The EUR and AUD made testing lows but fought back to finish higher to the USD. The GBPUSD jumped after positive services PMI closing 60 pips higher. Has the JPY run hit a wall? All of the majors made strong rallies to the JPY overnight. The EUR and AUD fighting back from new monthly lows! The USDCAD is going from strength to strength. Buyers surged into the pair as it added a further 145 pips closing above 1.2960 and getting very close to testing July 2017 1.3000 price highs. As tensions eased Gold eased losing $3.50. Resistance is seen at 1326.20 from the 4H chart. Price is trading higher this morning, if sellers can break 1319.20 we could see a leg lower develop but sellers should watch 1314.50 for potential buyer resistance if reached.

EURJPY snapped back last night bouncing from its 129.30 low. Buyers are presented with a new challenge the old support points. Will they become resistance? Buyers have their first test coming up at 131.20 – 131.50.

Good trading from Eightcap.

Sources; CNBC. All times are AEDST

* 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.