13th May 2019 - The trade talks between US and China are still dominating the sentiment

Walid Salah Eldin

Active member
214 1
The worries about breakdown of the trade negotiations between US and China are still containing the market sentiment which is looking ahead of Chinese's counter measurements to come.

USDJPY started the new week trading close to 109.75, after closing last week just above 110, While the demand for safe haven is expected to dampen again the yields curves of the UST, Despite the US equities markets recovery by last week end on cautious optimism about the future of the negotiations.

The Greenback has been depressed by the lower UST yields which made it less attractive against its rival currencies and against Gold which is now up for the third day in a raw trading close to $1288 per ounce.

GBPUSD started the new week above 1.30 psychological level and also EURUSD is now trading close to 1.1230, after finding support to get over 1.12 again last week but it is still well below its daily SMA50, While AUDUSD is now trading close to 0.6975, after closing last week just above 0.68.

The Japanese yen was the main gainer of that concerns about the trade talks between US and China on unwinding of the carry trades, as it is still having very low financing currency cost comparing to USD.

JGB 10yr yield is now standing well below Zero close to -0.055%, while UST 10yr yield is expected to dive down again after it could recover by last week end to stand close to 2.47%, after slumping to 2.4265% on Trump's decision to raise the levy on Chinese goods worth $200b from 10% to 25%.

The risk appetite could rise up by the end of last Friday session sending the US equities indexes future rates up, But now in the beginning hours of the new week, S&P 500 future is standing close to 2850 following recovery to close last week at 2885 above its daily SMA50.

The industrial commodities such as copper slipped to $2.757 per pound, after close last week close to $2.765 per pound and also the oil prices came down in the beginning of this new week to find WTI now close to $61.50 per barrel in intersection with its daily SMA50.

Following imposing its new levy, The comments which came out from Trump administration indicated that it is to wait for 2 or likely 3 week to reach a deal with China.

But this stance is expected to be changed too, as it looks that if there is a deal to come, it can not be before the coming G20 summit on 28–29 June 2019 in Osaka, after the previous meeting in Beyonce Aires by the end of last November sparked that running talking talks and hanged the Trade War fires which started again last Friday!

In the same time, EU leaders know very well that if there is a deal to come or even no to come between this 2 biggest economies, the turn will be on them next to reach a trade deal with this administration which is looking eyeing on the EU Automotive Industry as a next target.

AUDUSD Daily Chart:

AUDUSD-Daily-13-05-2019 05-19-00 ص.jpg

AUDUSD extended its slide to be trading currently near 0.6975 in its day number 15 of consecutive being below its daily Parabolic SAR (step 0.02, maximum 0.2) which is reading today 0.7055.

The pair has formed another lower high at 0.7068 on last Apr. 30 before diving down to 0.6961which is now forming the next supporting level to face the pair.

This slide extension drove the pair lower below its daily SMA50 last week, its daily SMA100 and its daily SMA200, while it is still under pressure below the trend line resistance which is extended from its formed peak on 26 January 2018 at 0.8135

The daily chart of AUDUSD shows that its RSI-14 is now in lower place inside the neutral region reading 36.639.
AUDUSD daily Stochastic Oscillator (5, 3, 3) which is more sensitive to the volatility is having its main line inside its neutral territory 27.183 leading to the downside its signal line which is higher in the same region at 31.721, after forming another negative crossover in this same region.

Important levels: Daily SMA50 @ 0.7079, Daily SMA100 @ 0.7105 and Daily SMA200 @ 0.7159
The Closest Experienced S&R:
S1: 0.6961
S2: 0.6858
S3: 0.6826
R1: 0.7068
R2: 0.7205
R3: 0.7293

Kind Regards

Global Market Strategist of FX-Recommends

Walid Salah El Din
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