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Global Markets Shaken As Trade War Worries Rise

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USD

The United States Dollar Index was surging in Yesterday’s trading, to erase some of post FOMC losses, the DXY traded a high of 89.95. As for today, the market is mixed, investors jumped in risk of trades, after President Donald trump imposed tariffs on Chinese products and he said that this is the first of many and confessed that the WTO, World Trading Organization, has been a “disaster” in the United States. Major US indices, fell between 2.5-3%, SPX500 and Dow Jones are down on the year, large cap stocks were hit hard. Economists are forecasting additional drops if this trade war is set to continue. In terms of data, the Core Durable goods index is on the calendar, market estimates improvements in these numbers, but the main market mover will be the reactions to the Tariffs.

EUR

EUR/USD fell yesterday to lows of 1.2285 after trading at highs of the 1.2390 post FOMC, due to the drop in Manufacturing, Services and composite PMI, from France, Germany, and Eurozone. The pair retraced some of its losses after heavy drops in European Indices. The Euro, in today’s trading, might be ranging inside yesterday’s highs and lows, if risk of trading continues.

GBP

Yesterday, the Bank of England had no change in the monetary policy, interest rate is still at 0.5%, and the Asset Purchase total is still at 435B. But as we said yesterday in our report, the market is pricing in a move of rate in May, this was translated in a vote of 7-2 vs. 9-0 expected. Two members, McCafferty and Saunders voted for a rate hike siting solid gains in earnings and inflation set in BoE price target. The GBPUSD climbed to a high of 1.4220 after the release, which is the highest since February 2nd, but selling pressures were noted and the pair dropped erasing FOMC gains.

Gold

Gold had a 38.2% Fibonacci retracement of the move from $1306 to $1337 and traded a low of $1325. But after tariffs on the Chinese products, the indices dropped and investors ran to the traditional safe haven, Gold is now trading at highs of $1341, the highest since the 20th of February. Gold is approaching the major resistance area for the past couple of years, $1351 and $1360 are good levels to watch.

Oil

Oil fell more than $1 yesterday after investors took profit of this week’s rally and US stock market falling. However, Oil prices were supported by the continuing effort of OPEC and non-OPEC to limit oil supply. Oil had risen by around 8% since the last two weeks, boosted by a weaker US dollar and rising tension in the Middle East.

The most important economic events:

  • CAD Core CPI (MoM) (Feb): (GMT 12:30) – Important - Forecast (N/A) – Previous (0.5%).
  • CAD Core Retail Sales (MoM) (Jan): (GMT 12:30) – Important - Forecast (0.9%) – Previous (-1.8%).
  • USD Durable Goods Orders (MoM) (Feb): (GMT 12:30) – Important - Forecast (1.5%) – Previous (-3.6%)
  • USD Cap Goods Ship Non Defense Ex Air (MoM): (GMT 12:30) – Important - Forecast (0.5%) – Previous (-0.1%).
  • USD Core Durable Goods Orders (MoM) (Feb): (GMT 12:30) – Important - Forecast (0.5%) – Previous (-0.3%).
  • USD New Home Sales (Feb): (GMT 14:00) – Important - Forecast (623K) – Previous (593K)

Disclaimer
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