The trade war continues to rock the markets, with Trump saying Thursday that the trade deal is getting closer and closer and risky assets have jumped. A day later, however, we learned that Trump had authorized an investigation into something resembling capital restrictions. That sent US stocks close to their weekly lows of support, which was a former resistance to the August range. In one sense, Trump puts his gun on the table and orders China to accept any trade deal. However, China may decide that these threats are only the first of a looming cannonade. At the same time, perhaps they hope it is better to fight now and pray for a new leader in Washington.
Chinese Foreign Minister Wang Yi said trade discussions could work if both China and the US “take more enthusiastic measures” to show goodwill and reduce “pessimistic language” in their trade dispute. He added that Washington has shown goodwill by easing tariffs on a number of Chinese products.
Trump’s recent actions certainly cannot be considered measures of well-being, but they are certainly enthusiastic. Although not yet a fact, markets are responding, with investors clearly showing their opinion on the matter.
It will be interesting in the new week to see China’s response, if any. It is hard to believe that the indexes can pull up again until this topic is resolved. There is a scheduled meeting between the US and China on October 7th, and until then, many things can happen and be said, and it was not surprising if the meeting did not even happen.
Oil prices are back in a downward trend after Saudi Arabia said oil production was fully restored after the attack and is working at full speed. Black gold prices have fallen almost 6% since the start of the week, the biggest weekly loss of two and a half months. The fall in prices came after the kingdom said it had recovered from the September 14 attacks on its energy facilities, which briefly interrupted about 5% of daily global crude oil production.
The US dollar has been trading without major changes as investors remain cautious about recent developments surrounding the impeachment investigation of US President Donald Trump. The pound is again under pressure following a report saying that the UK has not yet proposed “legal and operational” proposals for an agreement to exit the European Union. The Japanese Yen and Australian dollar movements, which have been performing best since the beginning of the day, once again emphasize that the markets are pricing a positive tone in trade and concerns about the future of the US president. EUR / USD is on the main diagonal support and breaking down will activate the bundle of debt stops, sending the price strongly in the South direction.
Market sentiment is about to begin to clear, so I expect a cautious start to trading on Monday. On Wednesday, ADP data can tilt the balance in one of two directions, giving traders a little preview of what to expect from Friday’s employment report. On Tuesday, the Australian Central Bank will announce its decision on the country’s base interest rate, with the majority expecting a 25 basis point drop in rates from 1.00% to 0.75%.
04:00 China – Manufacturing PMI
10:55 Germany – Unemployment Change
11:30 UK – Gross Domestic Product
07:30 Australia – RBA Interest Rate Decision
11:30 UK – Manufacturing PMI
12:00 Europe – CPI
15:30 Canada – Gross Domestic Product
17:00 USA – ISM Manufacturing PMI
15:15 USA – ADP Nonfarm Employment Change
17:30 USA – Crude Oil Inventories
11:30 UK – Services PMI
12:00 Europe – Retail Sales
17:00 USA – ISM Non- Manufacturing PMI
04:30 Australia – Retail Sales
15:30 USA – Nonfarm Payrolls
15:30 USA – Unemployment Change
17:00 Canada – Ivey PMI
Trader Aleksandar Kumanov