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U.S bank Holiday – Europe mixed; Yen – Gold increase as Tariff deadline looms;

Jul 5, 2018 | Daily Market Outlook

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20:00 GBP BOE Gov Carney Speaks

Quiet session for U.S stocks as traders observed Independence Day celebrations. Attention turned to Europe, major indexes closed lower for the session dragged by trade deadline worries and losses in the tech sectors which has trade war exposure. The Euro Stoxx 50 added 5.33 – The FTSE lost 20.20 and the DAX dropped 31.53. Trade volume was lower due to U.S bank holiday.

Technology stocks led the losses, losing more than 1% after a slide in U.S. chip makers overnight. U.S. peer Micron was banned from selling chips in China late Tuesday.

Britain’s dominant services industry gained momentum last month, ramping up expectations that the country’s central bank could soon raise interest rates. The IHS Markit services Purchasing Managers’ Index (PMI) rose to an eight-month high of 55.1 in June, further supporting recent signs of the U.K.’s tentative economic recovery. – CNBC Germany also recorded robust growth in its services sector. Markit’s final services PMI rose to 54.1 in June, climbing to its highest level in four months. –CNBC

Tariffs continue as the main focus, both countries have set new tariffs to come into effect on the 6th of July. The Trump administration has levied a 25% tariff on $34 billion in Chinese goods, while the Chinese government has retaliated by announcing tariffs on the same value of U.S. goods. “Uncertainty over the tariffs’ impact on trade led to a subdued mood in risk assets, although sentiment has stabilized with the RMB staging gains over the last two days,” Weiliang Chang, a foreign exchange strategist at Mizuho Bank, said in a note.

Asian markets have been mixed today with the ASX200 trading higher, key Asian indexes are trading in the red. The Nikkei down close to 1%, the Hang Seng .84% lower. Uncertainty continues for Asian traders with the looming tariff deadline approaching.

Risk major’s ended basically flat overnight and continue to trade flat in today’s session. The GBP picked up to the USD and JPY after the services PMI beat expectations. The other majors edged lower to the Yen as traders hedged bets to the safe haven currency.  Dollar wise the week picks up with FOMC meeting minutes and U.S employment data to finish the week.

The Yuan fetched 6.6350 per dollar, moving from Tuesday’s 11-month low of 6.7344, following reassuring remarks from Yi Gang, governor of the People’s Bank of China.

“Chinese authorities had initially appeared to approve fall in the yuan to support the economy ahead of a possible start of U.S. tariffs,” Minori Uchida, chief currency strategist at MUFG Bank.

Oil parred loses last night to close slightly higher, this morning sellers have taken price 57 cents lower after President Donald Trump urged OPEC to reduce prices. OPEC together with a group of non-OPEC producers started to withhold output in 2017 to prop up prices. Newly imposed sanctions on Iran could have been artificially holding oil higher. Technically 73.60 and 73.10 continue as resistance.

Gold held gains adding $5 uncertainty a key price supporter. So far today trade has been flat with traders sitting on the lines in wait of tomorrow’s tariff deadline. Bitcoin added 124 overnight but failed to beat 6760. This level is becoming key resistance traders. So far today we’ve seen a test higher and lower, price sitting flat around 6615.

Good trading from Eightcap.

Sources; CNBC – All times are AEST

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