Stocks, Aussie move lower as markets await tariffs

Summary:

• Trump has not announced tariffs – but it is expected
• US indices succumbed to a bad mood, Japan falls off a cliff
• EURUSD stuck ahead of the NFP report

Business tries to push but tariffs awaited

Bright moods on Wall Street have ended – at least for now. Thursday brought the second day of heavy loses among the technological stocks amid concerns that Trade Wars with China could seriously undermine prospects for the US companies. Thursday was the last day of business consultations regarding the trade policy with China and the overwhelmingly vast majority was against the tariffs and tried the last resort push to convince Trump it was a bad idea. President could have technically announced tariffs on $200 billion of the Chinese imports (4 times as much as already in place) 2 hours ago but we have not heard anything yet. However, it is widely believed that this is just a matter of time and that perhaps the White House could present the announcement on Friday.

US stocks move lower, Japan plunges

Last week we analysed the US500 D1 chart stressing that the bearish engulfment formation appeared which was very accurate in the past. Indeed we may see that after short hesitance the market turned lower and the first support can be seen along the upwards trend line – around 2825 points. We can see that although the last 3 candles are green, they all have lower shades – a sign that the demand still tries to fight.

US500 moves towards the trend line after a bearish engulfment pattern. Source: xStation5

A much bleaker outlook refers to JAP225 which literally plunged from a strong resistance at 23000 points. This was a strong level and the move towards the support of 21900 has been pretty brutal. A couple of factors helped fuel it – Trade Wars fears, EM contagion, worries over a possible JPY gains amid impact of Trade Wars and yesterday’s remarks from Trump on Japan. The US president said that although he liked the relations with the Asian ally, those relations could sour if the Japanese “learn how much they need to pay”. Trump referred to the trade deficit he wanted to be narrowed down suggesting that he could aim at Japan, even at the cost of the traditional alliance (which would be quite insane given his spat with China but…). Having said that the JAP255 has recovered significantly from the intraday losses and now the traders await if we get tariffs announcement today.

JAP225 plunged from the 23k resistance. Will 21900 support help in recovery? Source: xStation5

US dollar stable ahead of the NFP, Aussie slides

US dollar has been generally stable today as traders await the NFP report (1:30om BST). In our preview yesterday we hinted that seasonality and base effect could make it hard for the report to surprise on the positive side. EURUSD has been stuck in a consolidation – bulls need a weak US report to move towards 1.17. AUDUSD and NZDUSD are lone movers today and they both move lower amid Trade Wars concerns.

EURUSD needs a weak NFP to extend recent gains. Source: xStation5

In the other news:

• Brazil’s Bolsonaro stabbed, the incident will further heat up situation in Brazil a month ahead of elections
• Oil prices helped by a rise of inventories
• USDZAR moves 0.5% lower as emerging currencies stabilize, will look to the NFP report, news on tariffs today
• Bitcoin price consolidates after a major plunge on Wednesday and Thursday