MARKETS RISE AS TRADERS IGNORE NEW US TARIFFS
World stocks jumped today even after the US imposed a ten per cent tariff on Chinese goods worth more than $200 billion. Germany’s DAX rose by 22 points, EU’s Stoxx by 3.5 points, and China’s Shanghai Composite by 48 points. US futures also pointed to a high open with the S&P 500 and Nasdaq futures gaining by 20 and 5 points respectively. The upward movements were attributed to the size of the tariffs announced by the United States. The tariffs announced yesterday will be 10%, which was lower than the 25% traders were expecting. Today, China announced that it will implement tariffs on American goods when the new tariffs go into effect. Traders expect tariffs on US agricultural and energy products to be increased.
The Australian dollar rose slightly after the central bank released minutes for the meeting held earlier this month. In the minutes, officials were optimistic about the Australian economy. Mostly, they were optimistic about the western part of the country, which was starting to improve. They held their economic projections unchanged and hinted that the next monetary policy decision will be a rate hike. The officials said that the current low interest rates will remain for a while. In recent weeks, the biggest banks in the country have started increasing interest rates as their costs of borrowing in the money market has increased.
The Japanese Yen fell against the US dollar as South Korean and North Korean presidents held a summit in Pyongyang. This was the third time the two leaders have meet this year. The meeting comes a week after the North Korean leader requested another meeting with the US president. It also comes at a time when trade relations between the US and China are increasing. The Japanese yen is often used as a safe haven currency. Therefore, when there are negotiations in the peninsula, it tends to fall against the US dollar.
The EUR/USD pair was little moved today, mostly because there was no major economic data from the US and European Union. It is now trading at 1.1682, which is slightly lower than yesterday’s high of 1.1716. Yesterday’s high was an important resistance level as shown below. The 28-day RSI is currently at 53 while the 14-day RSI is at 52. Both are heading lower. This is an indication that the pair is at a neutral level, which means that it could break out in either direction.
Starting from February this year, the AUD/USD pair has been making lower lows and higher lows as shown below. This has seen its price fall from a YTD high of 0.8135 to a YTD low of 0.7083. During this drop, the pair made almost perfect support and resistant pattern. Its current price is between the two diagonal support and resistance levels. If the ongoing pattern continues, the pair will likely test the 0.7300 support and then start coming down.
On Friday last week, the USD/JPY pair crossed the important resistance level of 111.76. Since then, the pair has traded above this level, albeit with smaller movements. It is now trading at 112.10, which is slightly above the middle band of the Bollinger Band indicator. The pair is likely to continue trading within this range as traders wait for the statement from the Bank of Japan tomorrow.