3 April: Stocks dive on trade-war fears. US$ mixed; safe-haven Jpy and Gold in demand. RBA today.

By | April 3, 2018


It was mostly about stocks on Monday, with the DJI at one stage falling over 700 points as traders feared the increased chances of an all out trade war after China retaliated with their own tariffs on US goods, by up to 25% on 128 US products. Investors also fled technology stocks amid re-surging trade worries, sending both the S&P and the DJI below their 200-day moving averages for the first time since the Brexit vote in June 2016.

The US$ saw a sharp fall in US$Jpy on safe haven grounds, but elsewhere is generally fairly steady after some brief support on much stronger than expected ISM prices paid although the impact quickly faded. The ISM manufacturing index rose dropped to 59.3 in March, down from 60.8 and was slightly below expectation of 60.0. The prices-paid component though, surged to 78.1, up from 74.2, beating expectation of 72.5. The Employment component dropped to 57.3, down from 59.7. The Aud$ remains heavy ahead of today’s RBA Meeting. In the commodities markets, Gold prices rose sharply, by $20 as escalating U.S.-China trade war tensions stoked safe-haven demand, while WTI fell almost 3% as escalating trade war fears prompted traders to cut long positions, offsetting recent data pointing to possible tightening in domestic output.

Although a shortened week, it is still going to be a busy one, with the US employment numbers due on Friday, where the market will once again be looking towards the NFP (exp+198k) and more importantly for any sign of inflation growth through the Average Hourly Earnings which so far have failed to give any hint of moving higher, reining in thoughts of how many more times the Fed might actually be able to hike rates this year. Elsewhere the main event will be today’s RBA Meeting, although no change to policy is expected, with the focus to be on the wording of the statement. Other events that traders will be watching will be the PMIs, mostly to be released today and Thursday, the March EU CPI and the US ADP Jobs data (Wed) and the ECB Minutes (Thur). There will be various Central Bank speakers through the week but all the focus though will be on Friday’s jobs data, and until then it could remain choppy and predominantly sideways.

EURUSD: 1.2302
Res  1.2320  1.2345  1.2370
Sup  1.2280  1.2250  1.2220
USDJPY: 105.86
Res  106.20  106.45  106.70
Sup  105.65  105.30  104.90
GBPUSD: 1.4050
Res  1.4080  1.4115  1.4160
Sup  1.4025  1.3985  1.3945
USDCHF: 0.9551
Res  0.9565  0.9585  0.9615
Sup  0.9525  0.9505  0.9480
AUDUSD: 0.7659
Res  0.7700  0.7685  0.7720
Sup  0.7640  0.7625  0.7600
NZDUSD: 0.7212
Res  0.7230  0.7245  0.7260
Sup  0.7200  0.7180  0.7155
S&P: 2583
Res  2600  2620  2640
Sup  2570  2550  2530
DJI: 23620
Res  23810  23995  24280
Sup  23490  23305  23055
ASX SPI: 5746
Res  5760  5780  5800
Sup  5710  5730  5695
XAUUSD: 1340
Res  1345  1355  1365
Sup  1335  1325  1315
XAGUSD: 16.59
Res  16.70  16.80  16.90
Sup  16.50  16.35  16.20
WTI: 62.95
Res  63.60  64.25  64.80
Sup  62.75  62.10  61.45