Investors in cautious mode

5 July, 2018

Global equity and foreign exchange markets were relatively quiet on Wednesday as the U.S. financial markets were closed in observance of Independence Day. However, the looming U.S. tariffs on $34 billion worth of Chinese imports and the expected retaliation from China are keeping investors on edge.

The decision by the U.S. administration is expected to be taken on Friday and China is expected to retaliate immediately. These tariffs will not take investors by surprise as they have had sufficient time to price them in; given that these measures are considered only a small portion of the U.S.- China trade’s value, the impact on growth and corporate earnings will be minimal. The critical question markets need an answer on is -  where is this trade war heading towards?  President Donald Trump had threatened to impose a further $200 billion in tariffs on Chinese imports, which China will respond to in equal measure. If such measures are implemented, it will certainly lead to a meltdown in global equities, emerging markets currencies and debt.

With the current environment of uncertainty, expect risk-averse behavior to continue in the coming weeks.

Away from the political trade tensions, traders will be looking closely at the Fed minutes scheduled for release later today. In his last press conference, Fed Chairman Jerome Powell was optimistic about the U.S.’s economic performance. He expected gradual increases in the federal funds to resume, given the low unemployment levels and accelerating inflation. However, investors are keen to know whether the imposition of trade tariffs and similar reactions from trading partners will threaten his outlook. On a different note, the dollar has appreciated 6.8% since its February lows. Such strength is expected to have a negative impact on price levels and exports. Meanwhile, the yield curve has continued to flatten over the past several months, increasing the risk of a recession. These factors have been ignored by the Fed so far, so today we will get to know whether any of these risks will hinder the Fed’s policy path, and whether the dollar will move accordingly.

On the data front, the U.S. ADP employment report is expected to show that 190 thousand jobs have been added to the economy, while the ISM non-manufacturing PMI for June is anticipated to retreat slightly to 58.3, down from 58.6 in the previous month.


Source link  
Yuan firms on trade talk hopes

A sense of stability returned to financial markets on Tuesday as investors swept aside geopolitical risk factors to focus on progress in trade talks between...

U.S. stocks on track for worst December

December has so far been one of the worst year-ends for global investors in recent history. The S&P 500 has fallen 4.6% from the beginning of the month...

What outcome to expect to from Vienna

A few months ago, some investors speculated that Oil prices could reach $100 per barrel in 2018. Sanctions on Iran, shortages in supplies, strong demand...


Trade truce provides boost to risk

Just a few days after Fed Chairman Jerome Powell unexpectedly signaled that the Federal Reserve is turning dovish, investors received further positive news...

Risk assets rally on Powell Put

Investors were all ears for yesterday's speech from Federal Reserve Chairman Jerome Powell at the Economic Club of New York. A couple of keywords...

Brexit to dominate the headlines

Two months ago, U.S. equity investors cheered a new all-time high on the S&P 500. Stocks advancing to new record numbers started looking as a normal...


iPhone sales indicate economic growth?

The recovery in U.S. stocks from October's slump evaporated on Monday with the Dow Jones Industrial Average falling more than 600 points, while the Nasdaq...

Saudi comments at OPEC support Oil price

The initial headlines coming out of the OPEC meeting in Abu Dhabi that Saudi Arabia has committed itself to lower production output should be enough...

Risk assets boosted by divided Congress

Asian stocks followed Wall Street higher after U.S. mid-term elections produced a divided Congress on Wednesday. All major U.S. indices climbed more than...


In the past 24 hours Bitcoin has lost -3.86% and reached $3323.76464662. Open your trading account with the best cryptocurrency brokers on special terms today.

In the past 7 days the EUR/USD pair has lost -0.0395% and is now at $1.1371. Start trading and making money on Forex today.

In the past 7 days Ethereum has lost -3.72% and is now at $86.9866867157. Have the most popular cryptocurrencies compared online 24/7.


Top Brokers offering Forex Market Analysis



Forex Currencies Forecasts



Top 10 Forex Brokers 2018

# Broker Review
1easyMarketseasyMarkets92%
2FXTMFXTM88%
3HYCMHYCM87%
4Alfa-ForexAlfa-Forex86%
5FxProFxPro85%
6FIBO GroupFIBO Group84%
7OctaFXOctaFX83%
8HotForexHotForex82%
9AvaTradeAvaTrade80%
10FXCMFXCM78%
  


Share: