Page 143 – XTrade

U.S.- China trade issues seem to be lowering, market tensions ease

China asks U.S. to offset trade loss due to Metal Tariffs on Tuesday news markets consider as positive, meaning China and the U.S. are in talks to find a mutually agreeable approach to narrow the trade deficit gap. U.S. Treasury Secretary Steven Mnuchin said he is “cautiously hopeful” that China would reach a deal to avoid tariffs on $50 billion of U.S. exports. Results? DXY Index back to where it started the week; more sideways trading likely into end of month and Good Friday. EUR/USD drop driven by more signs Eurozone data momentum is cooling; USD/JPY propped up by rebound in global equities.

Sentiment for the US Dollar has turned negative into the last week of the month and the quarter. But for now in general, US stocks are continuing to rally, building on their biggest one-day gains since 2015, as soothing noises from the White House ease investors’ fears that a trade war will hurt a robust global economy. Which is good! Trade War is never good.

Indeed, in a week marked by lower participation and thinner volumes in the lead up to Good Friday, Easter, and Passover, the cooling trade tensions between China and the US have proven to be a potent catalyst for risk appetite. US equity markets have swung +/-2% for three days in a row now, the first time that has happened since August 2015; yesterday’s point gains in the Dow Jones Industrial Average were the third-best on record.

Donald Trump’s move last week to impose tariffs on $60bn of Chinese imports rattled fund managers who have enjoyed a benign economic backdrop over the past year. However, sustained hope that China and the US are working to avoid a series of retaliatory measures is helping the S&P 500 rise 0.4 in opening trade on Tuesday, adding to Monday’s 2.7 per cent advance.

The “rally was helped by a much more diplomatic tone out of the White House,” Jim Reid, a strategist at Deutsche Bank, noted of Wall Street’s bounce

Sources:

https://www.ft.com/content/ba50fcd6-318d-11e8-b5bf-23cb17fd1498

https://www.investing.com/news/economy-news/top-5-things-to-know-in-the-market-on-tuesday-1363685

https://www.dailyfx.com/forex/fundamental/daily_briefing/daily_pieces/top_fx_headlines/2018/03/27/DXY-Rebounds-on-Cooling-Trade-Tensions-Month-End-Rebalancing.html

https://www.fxstreet.com/analysis/eur-usd-analysis-slide-paused-but-may-continue-with-the-us-opening-201803271244?utm_source=NLsession&utm_medium=email&utm_content=hot-story-headline&utm_campaign=america-newsletter

Gold is holding and extending the gains from the recent four day winning run

Gold futures for April delivery on the Comex division of the New York Mercantile Exchange gained $1.00, or 0.07%, to $1,356.0 a troy ounce by 2:50AM ET (06:50 GMT). The U.S. dollar index that tracks the USD against a basket of six major currencies last stood at 88.54, down 0.11%. Gold prices have been on a streak of gain for Monday and Tuesday trading sessions, as the dollar gave up its earlier gains against other currencies in Asia amid receding trade tensions between the world’s two largest economies after the U.S. and China hinted talks to ease fears of a full-blown trade war.

Currently, Gold trades at a five-week high after sharp rally but risk-on appetite may weigh on the precious metal. Most likely the situation is about Gold consolidating near 6-week tops, just above $1350 level, but we will be watching the developments closely.

Gold prices rose to a five-week high of $1,356.70 overnight buoyed by a weaker dollar and heightened tensions between Russia and the West, even as concerns over trade friction between Beijing and Washington subsided.

Prices of the precious metal were boosted after the U.S. said it would expel 60 Russian diplomats, joining a coordinated global response punishing the Kremlin following a nerve agent attack on a former Russian spy in Britain.

Russian Deputy Foreign Minister Sergei Ryabkov said on Tuesday that Moscow would respond harshly to the measures.

Meanwhile, fears over the prospect of an all-out trade war between the U.S. and China eased following reports on Monday that the two sides were negotiating to resolve the issue behind the scenes.

Sources:

https://www.investing.com/news/commodities-news/gold-prices-pull-back-from-5week-highs-1363605

https://www.investing.com/news/commodities-news/gold-prices-gain-as-dollar-slip-despite-easing-trade-war-fear-1363500

https://www.ft.com/content/cf917540-3128-11e8-ac48-10c6fdc22f03

https://www.fxstreet.com/markets/commodities/metals/gold

Global Markets Strike Back: rally on tariff talks ongoing

A rebound on global stock markets is gathering pace, tracking hopes that talks between the US and China could prevent any escalation of the trade dispute between the two countries. The brief situations for the markets today looks like this: European bourses rise as sentiment improves on hopes for tariff talks while Wall Street futures point to strong opening gains. In Asia: Japan stocks fight back from six-month lows as Asian equities bounce back and South Korea steel stocks rally on hopes for exemptions from tariffs.

JPY and Swiss franc slip from highs and Oil prices edge lower due to China and USA supply data we talked earlier today. The improving mood is helping London’s FTSE 100 up 0.5%. Frankfurt’s Xetra Dax 30 is 0.8% higher, and the Europe-wide Stoxx 600 0.6%

U.S. stock market futures were up more than 1% on Monday, boosted by reports that the United States and China were willing to negotiate tariffs and trade imbalances to avert a trade war.

Wall Street’s main indexes surged 1.5 percent at the open on Monday after reports that the United States and China were willing to negotiate tariffs and trade imbalances to avert a trade war.

The Dow Jones Industrial Average (DJI) rose 394.94 points, or 1.68%, to 23,928.14. The S&P 500 (SPX) gained 40.73 points, or 1.58%, to 2,628.99. The Nasdaq Composite (IXIC) added 136.21 points, or 1.95%, to 7,128.87.

Sources:

https://www.ft.com/content/ebe542fa-309a-11e8-b5bf-23cb17fd1498

https://www.investing.com/news/stock-market-news/stock-futures-jump-on-report-of-uschina-trade-talks-1361319

https://www.dailyfx.com/real-time-news?ref=SubNav

https://www.investing.com/news/stock-market-news/stocks-wall-street-surges-as-china-us-negotiate-trade-1361727

Oil prices fall as U.S. trade dispute with China looms

WTI (oil futures on NYMEX) trims gains and looks to test the $ 64.50 support, having failed to sustain above the $65 mark on several occasions. Brent and WTI crude oil futures dipped on Monday as concerns of a looming trade dispute between the United States and China weighed on global markets. Chinese government officials however are confident that a carefully calibrated response to punitive tariffs outlined last week by US President Donald Trump will help contain the fallout from a Sino-US trade dispute. China surpassed the U.S. to become the world’s largest importer of crude in 2017.

Rightly so, China would want to play a more active role in influencing the price of crude oil, experts say. This fact weighed on crude oil futures as well. U.S. West Texas Intermediate (WTI) crude futures (CLc1) were at $65.49 a barrel at 0543 GMT, down 39 cents, or -0.6%, from their previous close. We shall see how the situation develops further. China surpassed the U.S. to become the world’s largest importer of crude in 2017. Rightly so, China would want to play a more active role in influencing the price of crude oil.

Shortly beforehand, Brent crude futures surpassed $70 per barrel for the first time since January.

Price of oil is also heavily influenced by the events in the Middle East.

Rising geopolitical risk in the Middle East has driven oil prices up recently. President Donald Trump continues to suggest the U.S. will pull out from the Iran nuclear deal, which raises concerns that sanctions will be reimposed on the country and severely limit Tehran’s ability to export crude oil.

These concerns escalated just over a week ago when Saudi Arabia’s Prince Mohammed bin Salman ramped up tough rhetoric over Iran, pledging to acquire nuclear weapons if Iran develops them. His recent talks with President Trump in Washington, pledging to buy more U.S. military equipment, also show that Saudi foreign policy is becoming more aggressive.

Sources:

https://www.ft.com/content/e598c6b0-3022-11e8-b5bf-23cb17fd1498

https://www.fxstreet.com/markets/commodities/energy/oil

https://www.ft.com/content/e598c6b0-3022-11e8-b5bf-23cb17fd1498

https://www.ft.com/content/fa378ba4-2e99-11e8-9b4b-bc4b9f08f381

https://www.ft.com/markets/commodities

https://www.investing.com/news/commodities-news/brent-crude-oil-futures-above-70-per-barrel-on-middle-east-tension-1359217

https://www.investing.com/news/commodities-news/oil-prices-fluctuate-amid-middle-east-tension-launch-of-shanghai-oil-futures-1359299

Trade war fears hit markets hard

The Trump administration plans to use new targeted tariffs to apply “maximum pressure” on China to stop it stealing the intellectual property of American business, according to the top US trade official.

Wall Street’s S&P 500 falls by over 1% in opening trade on trade dispute concerns, with Dollar extending losses and investors buy into US government debt, hitting yields. Practically, Wall Street was sucked into a global sell-off after comments about the Trump administration’s plans to use new targeted tariffs deepened concerns over the outbreak of a global trade war. The Dow Jones Industrial Average and Nasdaq Composite were each down 1.2%.

President Trump’s trade barriers are causing concerns for the Fed, where policymakers believe these measures will put a break on growth and the market seems to agree. Important to say that investors are also absorbing the implications of the latest policy meeting of the Federal Reserve, which delivered a ‘dovish hike’ at its meeting on Wednesday.

The dollar fell to one-month lows against a currency basket, after the Federal Reserve raised interest rates, but stuck to its forecast for two more hikes this year.
Some investors had expected the Fed to project three more rate hikes this year so the decision to stick to its forecast for two additional hikes was seen by some as less hawkish than expected.

The U.S. dollar index, which measures the greenback’s strength against a basket of six major currencies, was down 0.2% to 89.12, its lowest level since February 19. The index fell 0.74% on Wednesday, its largest one-day decline since mid-January.

Asian markets closed mostly lower, with bourses in the region giving up early gains to close in negative territory.

Sources:

https://www.ft.com/content/f78ec216-2d7a-11e8-a34a-7e7563b0b0f4

https://www.ft.com/content/8c107278-2dd4-11e8-a34a-7e7563b0b0f4

https://www.ft.com/content/b5563b96-2d2e-11e8-9b4b-bc4b9f08f381

https://uk.investing.com/news/stock-market-news/stocks-us-futures-fall-as-trump-set-for-chinese-tariffs-1089921

https://uk.investing.com/news/economy-news/top-5-things-to-know-in-the-market-on-thursday-1089859

Fed chair Powell sets tone with first policymaking meeting

Dollar slips after Fed decision, trade worries shackle shares. The US central bank raised the target range for the federal funds rate to 1.5-1.75% as it predicted inflation would accelerate in the coming months. The overall message was hawkish, projections indicated there would be three rate increases this year, against some forecasts of four. Instead, the Fed pointed to an extra increase in 2019 with more tightening in 2020.

Wall Street stock indexes ended the day lower, with the S&P 500 (SPX) losing 0.18% despite a boost from sharp gains in energy shares (SPNY) on rising oil prices. The Nasdaq (IXIC) dropped 0.26% with Apple (O:AAPL) falling below its 100-day average even as Facebook (O:FB) bounced back after two days of steep losses amid a controversy over outside exploitation of its users’ data.

That pushed the USD lower in the currency market, with the dollar index (DXY) (=USD) testing this month’s low after posting its biggest fall in two months on Wednesday.

EUR gained 0.2% to $1.2363, extending its recovery from a near three-week low of $1.2240 touched earlier in the week.

USD shed up to 0.4% to 105.58 JPY , turning down on the week to edge closer to the 16-month low of 105.24 hit on March 2. It last stood at 105.91 yen.

GBP pound hit a 1 1/2-month high of $1.4171, building on Wednesday’s one-percent gains. Strong British wage data published on Wednesday cemented expectations that the Bank of England was likely to signal a May rate hike after its monetary policy meeting later in the day.

Following the Fed’s move, the People’s Bank of China gingerly raised the seven-day reverse repo rate, a key short-term interest rate, by 5 basis points, to prevent U.S.-China rate differential from getting too wide.

Sources

https://www.ft.com/video/87ca55bb-fae7-40b6-97d9-8c55d8243780

https://www.ft.com/content/8bd77102-2d4e-11e8-a34a-7e7563b0b0f4

https://www.ft.com/content/332d2e56-57b6-4d6b-8c49-ae8584679154

https://www.ft.com/content/45811dbc-2d93-11e8-9b4b-bc4b9f08f381

https://uk.investing.com/news/stock-market-news/dollar-on-defensive-after-fed-trade-worries-nag-shares-1089564

https://uk.investing.com/news/economy-news/us-set-for-china-tariffs-by-friday-as-trade-diplomat-says-has-tools-1088907

https://uk.investing.com/news/economic-indicators/uk-wage-growth-near-twoandahalf-year-high-boosting-chances-of-bank-of-england-rate-hike-1088073

https://www.fxstreet.com/news/us-dollar-tumbles-to-lows-near-8940-on-fomc-trade-201803220813