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
Upcoming high impact news:
Heavy new’s day for the AUD starting from 11:30 am
▸ Current Account – Retail Sales
▸ 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
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