23 Mar: Stocks pummelled, US$ mixed after Trump announces possibility of tariffs on China. US Durable Goods ahead.

By | March 23, 2018

 

It has mostly been a day of risk aversion after Donald Trump signed a presidential memorandum that could impose tariffs on up to $60 billion of imports from China, although his action was somewhat watered down compared to the fears of an all-out trade war. Under the terms of the memorandum, Trump will target the Chinese imports only after a consultation period, a measure that will give industry lobbyists and legislators a chance to water down a proposed target list which runs to 1,300 products. The Yen has been the main beneficiary while the AUD$ remains the weakest, due its tie with China. Earlier in the day, with regard to Cable, the BoE left bank rate unchanged at 0.50% and asset purchase target at GBP 435b as widely expected. Sterling initially spiked higher as 2 hawks dissented and voted for rate hike but the overall tone of the statement remained cautious and Sterling later gave back some of its ground. Elsewhere, stocks did not like the Trump stance on China and the US indices are down by around 3% and it looks as though they could go a lot lower, while the commodities are also heavy, with WTI down by around 1.3% and the metals by 0.25%.

In terms of data, the EU PMIs were generally disappointing and weighed on the Euro. The EU PMI manufacturing dropped to 56.6 in March, down from 58.6, below expectation of 58.1, the lowest in 8 months. The EU PMI services dropped to 55.0, down from 56.2, below expectation of 56.0 while the EU PMI composite dropped to 55.3 down from 57.1, lowest in 14 month. The German PMI manufacturing dropped to 58.4 in March, down from 60.6, below expectation of 59.8. The PMI services dropped to 54.2, down from 55.3 and missed expectation of 55.0. Also from EU, the German IFO business climate dropped to 114.7 in March, down from 115.4 but slightly above expectation of 114.6. The IFO expectation dropped to 104.4, down from 105.4, met consensus and the current assessment dropped to 125.9, down from 126.3, above expectation of 125.6.

From the US, the initial jobless claims rose by 3k to 229k in the week ended March 17. The 4-week moving average rose 2.25k to 223.75k. Continuing claims dropped -57k to 1.83 mio, the lowest since December 1973. House price index rose 0.8% mom in January.

Friday will be mostly about politics, with the prospects of a trade war dominating the concentration of traders.  There is an EC meeting at which Mario Draghi will be present. That aside, Japan will have the CPI figure for February (exp 1.7%yy, Ex F/E 1.0%). The BOE Quarterly Bulletin will be released in early European trade, while from the US we get the February Durable Goods Orders (exp 1.5%, ex- transportation, 0.5%), the New Home Sales for Feb (exp 0.623 mio) and a speech from the Feds Kashkari. Have a good w/e.

CURRENCIES
EURUSD: 1.2305
Res  1.2320  1.2350  1.2385
Sup  1.2285  1.2260  1.2240
USDJPY: 105.31
Res  105.55  105.80  106.00
Sup  105.25  105.00  104.55
GBPUSD: 1.4100
Res  1.4120  1.4150  1.4180
Sup  1.4075  1.4055  1.4020
USDCHF: 0.9492
Res  0.9515  0.9540  0.9570
Sup  0.9475  0.9460  0.9435
AUDUSD: 0.7691
Res  0.7725  0.7710  0.7745
Sup  0.7670  0.7645  0.7625
NZDUSD: 0.7202
Res  0.7225  0.7245  0.7260
Sup  0.7185  0.7155  0.7140
INDICES / COMMODITIES
S&P: 2647
Res  2665  2685  2705
Sup  2640  2625  2610
DJI: 24000
Res  24150  24280  24405
Sup  23920  23800  23700
ASX SPI: 5831
Res  5850  5870  5890
Sup  5800  5820  5780
XAUUSD: 1329
Res  1335  1340  1345
Sup  1325  1320  1315
XAGUSD: 16.37
Res  16.50  16.60  16.70
Sup  16.30  16.20  16.10
WTI: 64.19
Res  64.85  65.70  66.60
Sup  63.55  62.55  61.20