Markets on back foot again as Trump raises China trade tariffs
Monday 6 May 2019
Well it was certainly a busy end to the week with a decent US jobs report initially giving the Greenback some support and Brexit-positive rumours on the cross-party talks sending the Pound sharply higher in the wake of both main parties suffering badly in UK local elections. Now throw in Trump saying over the week-end that he will raise tariffs to 25% from 10% on $200bln of imports from China and some renewed uncertainty/ reality check on Brexit and we've seen that fragile risk sentiment once again in tatters.
GBPUSD tested 1.3000 on Friday morning but failed and those Brexit rumours saw a rapid rally then final push into 1.3180-00 but we've seen a decent retracement in Asia on the over-cooked move and GBPJPY selling. Uncertain 24 hours ahead with London markets closed today and I will duly be heading out for the day too once this report is sent.UK services PMI on Friday came in slightly better than expected but had no real bearing.
EURGBP sellers still prevailing overall and helping to underpin Cable again as I warned on Friday and we've been down to 0.8485 ( GBPEUR up to 1.1787). GBPJPY has enjoyed a roller-coaster ride with GBP buying on Friday providing a good rally only to fall back in Asia on the risk-off Yen demand helping the GBP retreat.
I remain GBP bearish overall and continue to rally-sell as my preferred strategy and buy back in the dips amid all the uncertainty/indecision including Brexit. Plenty more noise to come in the days/weeks ahead and the algos will continue to feed off the headlines. I'll repeat, again, that we've seen a decent rally but it's all relative still and I don't think we're going anywhere of real note in a hurry just yet.
EURUSD has been caught up in all the EUR-cross volatility and after Friday's dip into 1.1130 has been up to test 1.1200 again before gapping to 1.1160 as Asian markets got underway.USDJPY is finding some dip demand this morning on reports that China may yet not delay US trade talks as widely reported in retaliation to Trump's move but equally rally sellers still poised too. USDCHF has retreated on the risk-off CHF demand but trying to hold around 1.0150 as EURUSD finds a bid again.
AUDUSD rally sellers have prevailed again helped by the US-China trade talk debacle and now broken down through those support at 0.6980 to post 0.6963 lows while USDCAD gapped higher in Asia on the risk-off CADJPY selling and has remained underpinned by softer oil prices but tightly bound again.
Fickle Forex markets ever prevailing so be ready with your entry/exit levels and orders as always.
Before I head out I must just add that to end this roller-coaster football season my beloved Shrimpers of Southend gave us all a massive scare before scoring an 86th minute winner to avoid relegation. Thank-you to all that got in touch after to offer congrats. Now we must learn from this season's debacle and re-build. Onwards n upwards always.
Have a good day out there one and all.
Interbank Rate 08.15 BST