US and China Trade Showdown Continues, More Tariffs Loom

USD

The dollar index climbed to two weeks high yesterday, after the risk appetite improved with US indices gaining more than 1%. This appetite is still in danger as the worries of the trade war are still on the rise. Yesterday, the Trump administration announced 25 percent tariffs on 1,300 Chinese Products from industrial technology, transport, and medical sector. US is trying to force changes in China’s “intellectual property practices”. Most of the economists are confirming that dealing with US-China Trade deficit by adding tariffs is completely wrong. Today, several economic indicators from US are due, we start by the ADP nonfarm employment change, Durable goods, and ISM services PMI.

EUR

EUR/USD fell yesterday to lows of 1.2260 as the volume in the market is starting to pick up. A slight drop in the manufacturing PMI of Germany weighed on the Euro currency. Today, the market awaits the preliminary release of the Consumer Price Index of March. Inflation numbers are expected to show some improvements, as long as these numbers are approaching the price target of the European Central Bank, a Hawkish tone is expected to be adopted.

GBP

 The pound held steady yesterday against a firmer dollar as data showed British manufacturing PMI gaining a bit of momentum and investors shifted their focus from Brexit to the state of the UK economy ahead of an expected rate hike next month.

CAD

The Canadian dollar was the strongest performer on Tuesday. The currency gained optimism and attracted buyers as a report showed that president Donald Trump is looking for a negotiated NAFTA deal in the coming two weeks. The USDCAD traded at the lowest in five weeks to trade between the 50 and 200 day exponential moving average.

Gold

Gold prices tumbled yesterday as the risk appetite improved. Gold has given back some of its Monday’s sharp gains as the stock market earned some hopes of stabilization. Gold prices are expected to remain supported as long as the trade tensions are rising. This week, the greenback is set to have a rally as we await the employment report from the United States which will affect gold prices.

Oil

Oil edged higher on Tuesday, boosted by a recovery in the US equities, and a heavy demand after posing the biggest daily percentage drop in year on Monday. The American Petroleum Institute report showed that the inventory dropped by 3.28 million last week where a surplus of 1.7 million was expected. Oil traders are waiting for the inventories report by the Energy Information Administration, which is due today.

The most important economic events:

• GBP Markit/CIPS UK Construction PMI (MAR): (GMT 08:30) – Forecast (51) – Previous (51.4).
• ADP Nonfarm Employment Change (Mar): (GMT 12:15) – Forecast (208K) – Previous (235K).
• EUR Euro-Zone Consumer Price Index Core (YoY) (MAR A): (GMT 09:00) – Forecast (1.1%) – Previous (1.0%).
• EUR Euro-Zone Consumer Price Index Estimate (YoY) (MAR): (GMT 09:00) – Forecast (1.4%) – Previous (1.20%).
• USD Durable Goods Orders (FEB F): (GMT 14:00) – Forecast (N/A) – Previous (3.1%).
• USD Factory Orders (FEB): (GMT 14:00) – Forecast (1.7%) – Previous (-1.4%).
• USD ISM Non-Manufacturing/Services Composite (MAR): (GMT 14:00) – Forecast (59.0) – Previous (59.5).
• USD DOE U.S. Crude Oil Inventories (MAR 30): (GMT 14:30) – Forecast (N/A) – Previous (1643k).

Disclaimer
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.