News & Analysis

Markets trade higher as Trump excludes Mexico and Canada; USD rebounds hitting majors; Oil continues its plunge; Monster news day coming up – BOJ – US employment data

Mar 8, 2018 | Daily Market Outlook

Upcoming high impact news:

▸ 12:30: CNY – CPI – PPI
▸ Tentative JPY – BOJ Policy Rate – Monetary Policy Statement – BOJ Press Conference
▸ 20:30: GBP Manufacturing Production m/m
▸ 00:30 CAD Employment ChangeUnemployment Rate
▸ 00:30 USD Average Hourly Earnings m/m – Non-Farm Employment Change – Unemployment Rate

US markets – finished higher on Thursday support by news President Trump will exclude Mexico and Canada from the new tariffs. The Australian government is also reportedly trying to negotiate an exemption from the coming steel and aluminium tariffs. The tariffs signed by Trump will take effect in 15 days and will exempt Canada and Mexico indefinitely. The moves slap 10 percent and 25 percent charges on aluminium and steel imports, respectively. CNBC reported yesterday that US Steel planned to reopen an idle plant creating 500 new jobs due to Trump’s tariff plan. Is this method in perceived madness from President Trump? The Dow Jones closed 93.85 pts higher, the S&P500 added 12.17 and the NASDAQ closed 31.30 higher in a choppy session.

Oil – continued to run with the bears closing a further 103 cents lower. Sellers briefly broke back into the $59 handle before buyers reclaimed $60 per barrel. We had asked about $61 support being a buyer level or seller treading water point, sellers quickly answered that question last night. Supply concerns remain; Inventories at Cushing storage hub rise –data. U.S. crude stocks still above five-year average. Technically $60 has now become the new $61 offering short-term holdup point to sellers. Without confirmation, buyers should be wary of this new low for now.

European markets – started shakily but regained composure to finish higher. The ECB held rates as widely expected but it dropped its easing bias, fuelling expectations that it will normalize monetary policy in the euro area. Basic resources were the worst performers, not only due to a threat of higher tariffs on metals but also following data showing that China imported 16 percent less iron ore in February from the previous month. BHP Billiton fell 2.6 percent on the day. Near the top of the European benchmark was ACS, finishing up by more than 7.7 percent, following news that it is studying a joint offer with Atlantia to buy Abertis. Indices gained, the FTSE closed 45.40 higher, the DAX added 110.21 and the CAC closed 66.27 pts higher.

Forex – saw a stronger USD and weaker risk. The ECB hurt an already weak EUR as it fell by 97 pips to the USD. The AUDUSD -35 pips and GBPUSD lost 89 pips. The Japanese Yen had a stronger night to risk but fell to a stronger USD. The USDJPY made modest gains adding 14 pips. Buyers have been active this morning price trading 14 pips higher. The USDCAD gave an up a 50 pip rally to finish lower. BOC statements and trade tariffs giving the CAD a boost. Gold gave up a small lead to finish $3.40 lower due to USD strength.  At this point, risk is flat to higher to the USD and JPY. News wise the busy week continues. The BOJ will be reporting later in the day this will include: BOJ Policy Rate, Monetary Policy Statement and the BOJ Press Conference. At 12:30 China will report CPI and PPI data. To cap it off we have Canadian and US employment data coming out at 00:30 this evening. This includes Average earnings and the Non-Farm Employment Change. Any surprises could set up fireworks so please manage your risk!

EURUSD – the ECB cut buyer confidence overnight, price has returned to a rough demand area. Depending on tonight’s NFP could we see further declines to test the lower support area at 1.2220?

Good trading from Eightcap.

Sources; CNBC.  All times are AEDST

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