The US stocks are set to have the worst April start since the great depression, 1929. China announced yesterday that they would impose tariffs on 128 US products as a response to US tariffs. The trade war between China and United States is weighing on global markets, no one knows how this war will end, but usually trade war is bad for everyone. Trump administration will declare this week new set of tariffs on “High Tech” Chinese products. Major US indices dropped more than 3% yesterday, with technology shares being slammed the most.
The dollar index, DXY, remains supported and still trading around a week high as volatility in the FX market was low due to holiday. Yesterday the ISM manufacturing PMI of March was released, and the data showed a drop to 59.3 from 60.8 in the previous month. The Dollar will be waiting for ISM services PMI on Wednesday, and the major event of the week which is the Non-Farm Payroll.
EUR/USD is trading in a tight range supported by the 50Day exponential moving average. The Euro traders will be eyeing the CPI numbers that are due on Wednesday, to have a vision on the development of the inflation in the Eurozone.
The Japanese Yen strengthened for the third consecutive day as investors run into safe heaven. The trade war is weighing on the stock market, and adding uncertainty to the global markets, as a result, investors are jumping into risk-off trades to avoid any losses that may be caused by these developments.
Gold rose more than 1% yesterday despite the expectation of low volatility. Gold prices traded in range between $1300 and $1366 in Q1 2018 supported by the mounting trade war worries and a weaker US dollar. Gold traders will be waiting for the Non-Farm Payrolls, where volume traded on gold picks up.
Oil prices slumped more than 3% in yesterday’s trading as investors draw back from risk assets due to escalation of trade tensions between China and the United States. In America, Crude inventories are estimated to have added 2 million barrels last week, according to a Bloomberg survey before Energy Information Administration date due Wednesday. The American oil production reached a high of 10 million barrels a day for eight straight weeks.
The most important economic events:
The prices and news mentioned in this outlook are absolutely no guarantee of future market performance and do not represent the view of ICM Capital Limited. Financial markets can move in either direction causing profits to be made or complete losses to be incurred by the trader. Each trader must decide for themselves what their risk appetite is and ensure that correct risk management procedures are in place before placing any trades.