Dollar weakens again on tariff details releases

Markets situation:

  • Wall Street futures point to losses of over 1% for major indices
  • Hong Kong’s Hang Seng and Seoul’s Kospi stand out with notable falls
  • Frankfurt’s export-heavy Xetra Dax hit as trade dispute unnerves investors
  • China applies 25% tariff to 106 US products
  • Trump’s new tariffs applied to 1,333 Chinese products
  • Dollar slips having held its ground before Beijing’s response
  • US corn and soyabean futures down almost 3% after inclusion on China’s list

It has been a hard day’s night for Dollar, recalling famous Beatles song. This morning, the US dollar remains weak as the Trump administration revealed trade tariffs that are wider ranging than previously thought. Market reaction has been relatively muted, but the underlying trend remains pressure on the dollar. Basically, China hit back at the Trump administration’s plan to slap tariffs on $50 billion in Chinese goods, retaliating with a list of similar duties on key U.S. imports including soybeans, planes, cars, whiskey and chemicals.

Tough hit for republican administration which is already under pressure from tech stock market woes. The dollar slumped against the Japanese yen, as safe haven demand was boosted by these escalating trade tensions. USD/JPY was down nearly 0.4% to 106.15, after sliding to an overnight low of 105.69.

The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, dipped 0.2% to 89.69.

In the bond market, the U.S. 10-year Treasury yield inched down to 2.770%.

Looking ahead, the highlight of Wednesday’s economic calendar will be the ADP jobs report at 8:15AM ET (1215GMT). Expectations are 208,000 private jobs were created in March.

Today`s market movers are: UK construction PMI at 09.30, European CPI flash estimates at 10.00, US ADP non-manufacturing PMI is at 15.00, US crude oil inventories are at 15.30, FOMC member Mester speaks at 16.00. All times are London times, of course.

Sources:

https://www.ft.com/content/fa91a692-3796-11e8-8eee-e06bde01c544

https://www.investing.com/news/economy-news/top-5-things-to-know-in-the-market-on-wednesday-1376930

https://www.fxstreet.com/news?utm_expid=.fMQX43R4Q9Op9hQ4nekQ9w.0&utm_referrer=https%3A%2F%2Fwww.fxstreet.com%2Ft%2Fh

 

Main issues markets deliver late on Tuesday, 3rd of April 2018

After U.S. stocks closed with their worst start for April since 1929, futures pointed to a slight bounce in opening trade on Tuesday. And that is a slight relief, we shall say. As we know Wall Street shares plunged on Monday as investors fled technology stocks amid resurgent trade war worries, setting the tone for global equities…

On a side note, fears of an all-out trade war between China and the U.S. continued to center investors’ attention. U.S. President Donald Trump is expected this week to release list of Chinese imports targeted for U.S. tariffs to punish Beijing over technology transfer policies, a move expected to further intensify the strain between two countries.

U.S. tariffs on $50 billion to $60 billion worth of annual imports is expected to be levied on products benefiting from Beijing’s “Made in China 2025” industrial development program, but it may be more than two months before the import curbs take effect, administration officials have said.

The U.S. Trade Representative’s office needs to unveil the list of products by Friday under President Donald Trump’s China tariff proclamation signed on March 22.

Dollar feels this “pain” and dollar index slipped 0.04% at 89.65. With no major economic reports on Tuesday’s calendar, markets will pay close attention to comments from a couple of Federal Reserve speakers for insights into the outlook for monetary policy

On commodity markets main issue is Oil prices which are slightly up on Tuesday amid a potential slowdown in U.S. production. But prices were capped by rising Russian output and expectations of a reduction in Saudi Arabian crude prices. Most likely Russia is trying to suck up more cash from oil markets enlarging its cash reserves while fighting budgetary scrutiny under western sanctions.

On stock news: beloved Spotify was set the reference price by the New York Stock Exchange for its shares of at $132, ahead of Direct IPO Listing. We shall see how this plays out, as 2017 was a bit less interesting from IPOs perspective. Spotify is based in Sweden. Arguably, it’s the second most well-known Swedish company after IKEA. Spotify has been around since 2008 so it’s not exactly a start-up. Private valuations for the company are as high as $20 billion.

Sources:

https://www.investing.com/analysis/blog-traffic-picks-up-as-bears-take-control-200302543

https://www.investing.com/news/economy-news/china-imposed-tariffs-on-us-products-to-balance-losses-state-media-1374900

https://www.investing.com/news/economy-news/trump-to-unveil-china-tariff-list-this-week-targeting-tech-goods-1372710

https://www.investing.com/news/commodities-news/oil-inches-forward-despite-increased-russian-production-1375123

https://www.investing.com/quotes/us-dollar-index

https://www.investing.com/analysis/here-come-the-unicorns-part-ii-spotify-opts-for-direct-listing-200299556

https://www.ft.com/content/aa461838-3716-11e8-8eee-e06bde01c544

https://www.fxstreet.com/currencies/eurusd

 

Dollar on a weak foot as tech stocks continue sell off.

Asian shares slipped on Tuesday amid escalating trade tensions and concerns about tech firms, although regional index declines were modest compared with those of their Wall Street counterparts as investors focused on global growth prospects. Asia Pacific stocks were short of local cues, leaving Wall Street to drive. That meant they headed lower as US tech is in an unwelcome spotlight while The Reserve Bank of Australia left interest rates alone at record lows, as expected.

The woes of US technology giants spilled over to Asian stock markets once again on Tuesday, which is hardly surprising given that so many of their suppliers are in the region.

The US dollar index remains on the back foot too. Amazon in particular has been hit hard, with founder Jeff Bezos losing hundreds of billions since Trump took aim via his Twitter account.

The story developed as follows: technology shares were hit hard on Monday after U.S. President Donald Trump attacked Amazon.com (NASDAQ:AMZN) over the pricing of its deliveries through the United States Postal Service and promised unspecified changes. The selling added to what has been a rough patch for technology shares this year. Facebook (NASDAQ:FB), Apple (NASDAQ:AAPL) and some of their peers had a woeful last quarter as investors reassessed high U.S. stock valuations in light of a cocktail of negative factors.

So called FANG stocks – Facebook, Amazon, Netflix (NASDAQ:NFLX) and Google (NASDAQ:GOOGL) – have been largely responsible for a multi-year bull run in world shares, although the threat of government regulation has raised worries about their outlook

The dollar pairs have a positive outlook though. AUD/USD leading the charge this morning and lifting off the 2018 lows. The NZD/USD is following suit, with the NZD holding well above the 2018 highs. The EUR/USD sold off, while the GBP/USD out-performed making gains and helping the EUR/GBP to losses yesterday. The GBP/USD is making follow-on gains this morning.

Main market moving events happening today are: German retail sales at 07.00, German final manufacturing PMI at 09.00, UK manufacturing PMI is at 09.30, FOMC member Brainard speaks at 21.30.

Sources: 

https://www.investing.com/news/stock-market-news/asian-stocks-slip-on-trade-woes-tech-sector-pain-1374853

https://www.dailyfx.com/forex/market_alert/2018/04/03/Asian-Stocks-Down-Once-More-On-US-Tech-Woes-Trade-Worries.html

https://www.ft.com/content/b1151f0e-3704-11e8-8b98-2f31af407cc8

https://www.fxstreet.com/news?utm_expid=.fMQX43R4Q9Op9hQ4nekQ9w.0&utm_referrer=https%3A%2F%2Fwww.fxstreet.com%2Ft%2Fh

 

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