 This time, the escalation of US-China trade war is largely ignored by the financial markets. There were just some very brief knee jerk reaction in stock and the currency markets. Yen and Dollar are both back under pressure after initial rebound. On the other hand, Australian Dollar looks immune from trade risks and trades broadly higher today, leading other commodity currencies. Though, one development to note is that Euro could be quietly picking up some momentum, helped by softness in Sterling. We might see Euro and Aussie compete for the strongest spot for the rest of the day. At the time of writing, European indices are trading all up slightly. FTSE is up 0.04%, DAX up 0.15% and CAC up 0.23%. German 10 year bund yield reversed initial loss and is up 0.008 at 0.466. Earlier in Asia, Nikkei closed up 1.41%, Hong Kong HSI up 0.56% and Singapore Strait Times was just down -0.07%. Most notably, China Shanghai SSE reversed earlier loss and closed up 1.82% at 2699.95, just shy of 2700 handle. The strong close is indeed suggesting short term bottoming, just ahead of 2638.30 key support (2016 low). But question remains on how strong the rebound could be. Technically, EUR/JPY has already caught up with USD/JPY and GBP/JPY and broke 131.00 minor resistance to resume recent rebound. It's time for EUR/USD to show whether it can break 1.1733 resistance. Dollar is staying in range against Australian Dollar and Canadian Dollar. But fresh selling is seen in early US session. USD/CAD could challenge 1.2975 temporary low while AUD/USD could take on 0.7228 temporary top during the session. |
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