GLOBAL MARKETS FALL AS TRUMP MOVES FOR ADDITIONAL CHINA TARIFFS
It was a sea of red for the global stocks market after the United States Trade Representative (USTR) started a research on Chinese goods worth more than $200 billion to place tariffs on. The new tariffs will go into effect after the USTR concludes its research on their impacts on companies and consumers. In a statement, Robert Lighthizer, said that the US had given the Chinese authorities ample time to change their trade practices. The US has complained that China has multiple trade violations such as tariffs and IP theft. Today, China accused the US of fighting globalization and threatened to retaliate.
The Canadian dollar was little moved against the dollar today ahead of the interest rates decision by the Bank of Canada (BOC). The officials are expected to hike interest rates by 25 basis points to 1.50%. Traders will also be looking forward to the accompanying statement and the press conference which will come later today for indications of the expected path of hikes. Recent employment and housing data seem likely to suggest a hawkish Bank of Canada.
The NATO summit started today with all eyes on Donald Trump, who has already made some headlines. Yesterday, as he was travelling, he sent a few angry tweets complaining about complacency from the European side. Today, at a breakfast meeting with the NATO secretary general, he attacked Germany for building a pipeline from Russia. He said that Germany was a captive of Russia. More headlines on trade are expected to come out of the meetings.
The US Producer Price Index (PPI) rose by 0.3% in June, which was higher than the expected 0.2%. It was nonetheless lower than the 0.5% growth in May. On an annualized basis, the CPI rose by 3.4% which was higher than the expected 3.2% and May’s 3.1%. The index measures the change in the price of goods sold by manufacturers and is an important measure of inflation.
The EUR/USD pair is trading at 1.1735, which is higher than the intraday low of 1.1695. The pair is now trying to reach the important resistance level of 1.1755 as traders focus on the new developments on trade. If the pair crosses this important resistance, there is a likelihood that it will try to test the important resistance level of 1.1790.
The XAU/USD pair fell today weighed down by the strong dollar. The dollar index was up by about 0.05%. The pair is now trading at $1250, which is at the middle band of the Bollinger Bands as shown below. The pair has also formed an asymmetrical triangle pattern, with the convergence expected to be at the current price. The pair could continue trading in this narrow range as traders wait for a catalyst to push it higher or lower.
The USD/CAD pair established a double bottom position at the 1.3065 on Monday. Since then, the pair has moved higher, albeit slightly as traders wait for the Bank of Canada, which is expected to hike by 25 basis points. Today, the pair reached an intraday high of 1.3173, which is slightly above the 61.8% Fibonacci Retracement level. A hawkish BOC will likely push the pair to the 1.3100 support level while a dovish statement will take the pair above the today’s high.