5 Mar: Fears of a trade war loom. Italian election result today. RBA, BOC, ECB, BOJ & NFP all up this week.

By | March 5, 2018

 

Stock markets, the US$ and the commodity bloc currencies all suffered in the wake of Donald Trump’s early morning Friday tweet that trade wars are good and easy to win. What a circus! Anyway, the Euro, Chf and Yen, in particular, were all higher against the dollar, while the Aud and the Canadian dollar both lagged on the back of his comments. The US stock markets eventually closed mixed, with the DJI down around 0.25%, while the S+P closed up by 0.5%, after both indices had recovered from deeper declines earlier in the session on the back of Trumps comments. Gold was better bid, having found some safe haven demand, while oil closed slightly firmer on the day, after again testing the 60.00 level which has so far held up. The market seems to be relying heavily on the comparison to the 2002 decision by US President George Bush to impose an imported steel tax, which caused the dollar, stocks and yields to all fall sharply.  On the brighter side today, the  DXY still ended with a positive result for second week in a row, while US yields were unfazed by Trump and closed higher as well (10 year: 2.867%  – from 2.81%, Thursday).

Elsewhere, UK PM Theresa May urged the EU on Friday to show more flexibility in talks on a future relationship after Brexit, saying Britain realised it could not get all it wanted but believed an ambitious trade deal was still possible. It did not do Sterling a lot of good though, which remained heavy against both the US$ and the Euro, which reached a 3 month high.

The Euro is opening on a firm note this morning in early inter-bank trade, currently at 1.2345 following the decision over the weekend by Germany’s Social Democrats, who voted to join Chancellor Angela Merkel’s next government, with Merkel expected to be re-inaugurated by mid-March. We now await the Italian election result due later this morning – Asia time..

It is going to be a big week ahead for data, and also for politics as Donald Trump’s steel/aluminium tariffs start to bite when he will apparently sign them into law, later in the week. In terms of data, we have central bank interest rate decisions coming up from the RBA (Tue), ECB and BOC (Thur) and the BOJ (Fri), as well as the US Jobs/NFP/Average Hourly Earnings data, also due on Friday, so it looks like being a busy end to the week. Ahead of that, today’s focus will be on the EU/US Services/Composite PMIs and the Sentix, while tomorrow will look to the Australian Retail Sales, coming in a couple of hours ahead of the RBA. Wednesday will have the Australian and the EU Q4 GDP, and then later in the day the US ADP Jobs data. Thursday continues the busy Australian theme with the release of the January Trade Balance, which will come just ahead of the Chinese Trade Balance, and then Friday will wind up with the China CPI and the German Industrial Production/Current Account although by then all the focus will be on the US jobs numbers. Have a good week.

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CURRENCIES
EURUSD: 1.2320
Res  1.2335  1.2360  1.2400
Sup  1.2305  1.2285  1.2255
USDJPY: 105.72
Res  105.80  106.00  106.15
Sup  105.50  105.25  105.00
GBPUSD: 1.3799
Res  1.3795  1.3815  1.3855
Sup  1.3755  1.3710  1.3675
USDCHF: 0.9371
Res  0.9385  0.9405  0.9425
Sup  0.9360  0.9340  0.9320
AUDUSD: 0.7763
Res  0.7770  0.7790  0.7820
Sup  0.7740  0.7730  0.7710
NZDUSD: 0.7240
Res  0.7255  0.7280  0.7300
Sup  0.7220  0.7200  0.7175
INDICES / COMMODITIES
S&P: 2688
Res  2695  2705  2720
Sup  2680  2670  2660
DJI: 24473
Res  24620  24725  24850
Sup  24425  24325  24205
ASX SPI: 5913
Res  5935  5950  5975
Sup  5905  5895  5880
XAUUSD: 1321
Res  1325  1330  1335
Sup  1315  1310  1305
XAGUSD: 16.49
Res  16.55  16.65  16.75
Sup  16.40  16.30  16.20
WTI: 61.44
Res  61.80  62.35  63.10
Sup  61.10  60.75  60.15