The Fed is ready to start tapering in November. Since the markets were expecting this and it wasn’t a surprise, the USD slumped allowing risk-on currencies and gold to rally up.
Forex today: trade wars are expanding
- The US dollar is steady today. Yesterday the US currency managed to close near 90, however, it could not stick there and slightly fell. Now the greenback is standing at 89.80. Let’s see whether trade wars tensions will push it up or down. Moreover, today the market is anticipating ADP Non-Farm Employment Change (15:15 MT time) and ISM Non-Manufacturing PMI (17:00 MT time) data. The forecast of both is weaker than the previous figures. Let’s look if the actual is greater.
- Trade wars are not empty words. China has responded to US tariffs on its high-tech goods. According to China authorities, the country is planning to implement an additional 25 percent tariff on imports of 106 U.S. products. The tariff list includes soybeans, automobiles, chemicals and aircraft. Overall it will cost around $50 billion of U.S. imports. It is worth to say that the market did not expect such tough charges from China, especially on such important products as soybeans, and airplanes. However, tariffs will be implemented if only the USA enact their own after a period of public consultation.
- Gold rose based on the trade wars’ news. The yellow metal is climbing to 1,348. According to Rick Rule, a chief executive officer of Sprott U.S. Holdings Inc. (involved in the gold market for forty years), if trade wars expand, bullion has chances to surge to $1,400 - its highest level in five years. The most crucial drivers of the gold price is a confidence in the US dollar and the U.S. 10-year Treasury. As soon as they show negative figures, gold gains points.
- S. government debt prices declined as investors are worried about the escalation of the US-China trade wars.
Look at the table for a better visualization.
- The euro has lost some points, however, a bullish tendency is still actual. Today’s European data was not encouraging for the euro. The actual data were either the same or lower than the forecast.
- Trade wars worries did not leave out the Canadian dollar. The USD/CAD could not break the support at 1.28 and turned around. There are no important events for the Canadian dollar until Friday. Let’s wait whether trade wars tensions lift the USD/CAD pair. The resistance lies at 50.0 Fibonacci retracements.
- In the environment of uncertainty, investors are putting money into safe haven assets such as Japanese yen. The USD/JPY pair is trading near 106. The support lies at 105.60.
- Both main oil benchmarks Brent and WTI plunged. Trading above $68 a barrel Brent fell to $67.10, WTI declined from $63.55 to $62.55.
- No more important events were noticed for today. Follow the market news tomorrow with us.
US Retail Sales will be out on October 15 at 15:30 MetaTrader time (GMT+3).
Australia will release employment change and an unemployment rate on Thursday, October 14, at 03:30 MT (GMT+3).
The United States will release the weekly Unemployment Claims on October 21, at 15:30 MT time (GMT+3).
Great Britain will publish the Inflation Rate on October 20, at 09:00 MT time (GMT+3).
The bullish movement in the stock market is gaining speed, and Bitcoin ETFs are closer than they might seem. What do we need to know for the next trading week?