Imminent threat of full blown US-China trade war is the dominant theme in the global financial markets today. Chinese stocks were hardest hit, down the most in more than three years. Other Asian markets were generally down while Japan continued to enjoy its ultra-long 10-day holiday. European markets are also broadly pressured except FTSE, which is helped by weakness in Pound. Declines somewhat slowed after refrained response from China. In the currency markets, Yen and Dollar remain the strongest one for today. At this point, Euro is the third strongest, with help from better than expected investor sentiment data and rebound in EUR/GBP. On the other hand, the Pound is the weakest one, paring some of last week strong gains. It's strength was built on optimism of a Brexit deal between Conservative and Labour. But they're have to deliver to solidify Sterling's strength. New Zealand and Australian Dollars are the next weakest, awaiting possible rate cut by respective central banks later in the week. Technically, for now, the rally in Yen and Dollar somewhat halted after initial response to trade war news. Yen crosses and commodity currencies are staying generally vulnerable. EUR/JPY is pressing 123.39 key support and sustained break will confirm near term bearish reversal. Break of 144.80 minor support in GBP/JPY will bring deeper fall to key support at 143.72, and break there will also confirm bearish reversal. AUD/USD resumed recent decline from 0.7295 and focus will turn to tomorrow's RBA rate decision. A rate cut, or even a hints on rate cut, could send AUD/USD further lower. In Europe, FTSE is up 0.40%. DAX is down -1.85%. CAC is down -1.93%. German 10-year yield is down -0.0162 at 0.012, staying positive. Earlier in Asia, Hong Kong HSI dropped -2.90%. China Shanghai SSE dropped -5.58%. Singapore Strait Times dropped -3.00%. Japan remains in 10-day holiday. |
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