Forexlive Americas FX news wrap: Tariff delay sends stock soaring.

Forexlive Americas FX news wrap: Tariff delay sends stock soaring. Author: Greg Michalowski | Category: News

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Forex news for NY trading on August 13, 2019

  • US stocks cheer US tariff delays
  • Oil – heads up for the inventory data due around the bottom of the hour
  • Pres. Trump has threatened to pull the US out of the WTO
  • WTI Crude oil futures settle at $57.10
  • US State Dept says it condemns violence and urges restraint in Hong Kong
  • Trump says Chinese govt is moving troops to Hong Kong border
  • Meanwhile, US and UK working toward road map declaration toward trade
  • Moody's gives statement on USTR delay of tariffs. May just be temporary reprieve
  • Trump says he delayed tariffs for Christmas season in case it had impact on shopping
  • Reports of a police operation getting underway at Hong Kong airport
  • Chinese media takes a victory lap after US climbs down on tariffs
  • USTR publishes full list of delayed tariffs. All cell phones included
  • German 2020 budget draft foresees no net debt increase
  • Trump hints that China has agreed to buy more agricultural products
  • Signs of a thaw in US-China talks spark dramatic market moves
  • USTR says some products will be removed from 10% tariff list
  • China's Lui He spoke with Lighthizer and Mnuchin – report
  • US 2s10s fall below 3 basis points
  • Trump says tariffs are a gift from China
  • US July CPI +1.8% vs +1.7% y/y expected
  • The AUD is the strongest. The CAD is the weakest as the NA trading begins

A snapshot of other markets are showing near the close:

  • spot gold, $-11.23 or -0.74% at $1499.94
  • WTI crude oil futures up $1.90 or 3.44% at $56.83

The US core CPI came out a little better than expectations at 0.3% versus 0.2% estimate. The YoY came in at 2.2% versus 2.1% estimate. That helped to give the dollar a little better bid but stocks were modestly lower on the opening, gold is up about $4.40, WTI crude oil futures were down about $0.23 and US yields were mixed with two and five years up marginally and 10 and 30 years down marginally.
Then at about 9:45 AM ET the USTR said that

  • some products will be moved from 10% tariff list
  • tariffs for some items including cell phones, laptops, and videogames and some clothing products will be delayed until December 15

Treasury Secretary Mnuchin and US trade representative Lighhizer also spoke with Chinese officials on the phone and said they would speak in a few weeks.
The "risk on" trade went into overdrives.

  • US stocks soared (S&P closes up 1.5% and Nasdaq up 1.95%)
  • US yields moved higher after being a safety haven over the last few weeks (2 and 5 year up 8.3 to 8.6 bps and 10 and 30 year up 5.3 and 3.0 bps respectively)
  • Gold fell (down -$11)
  • Crude oil soared (rose 3.44%)

In the forex market, the AUD, NZD and CAD moved higher, the JPY and CHF lost their safe haven bid and tumbled lower.
Below are the % changes and rankings of the strongest and weakest of the major currencies. The USD was mixed to up with gains vs the JPY, CHF EUR and GBP and losses vs the AUD, and to a lesser extent, the NZD and CAD.

Full risk on.
The reason for the change in heart?
The administration cited health, safety, and national security concerns. Pres. Trump also said that delaying tariffs ahead of the Christmas season was to avoid an impact on holiday shopping and that delays "helped a lot of people" (no kidding).
Below are the ranges for the major stock indices today (on a % change basis).
US stock changes.The US yield changes and high/low ranges are outlined in the chart table below:
US yields move higher
Technically speaking:

  • EURUSD: The EURUSD once again failed on a brief break above its 100 day moving average at 1.12218 (high reached 1.1228) and the news sent the pair to the downside.. The price at the close, is trading below its 200 hour moving average at 1.11778 trading at 1.1171. The 1.1162 – 67 is home to the 38.2% retracement of the August trading range, as well as swing levels. A move below that level would be more bearish in the new trading day.
  • USDJPY: The USDJPY had stay below its 100 hour moving average since August 1. However. the news sent the pair soaring above that MA and the 200 hour MA (currently at 106.116). The rest of the day, the price stayed above the 200 hour MA, moving to to an high at 106.97. The pair is closeing at 106.76. In the new day a break above the 107 level would target the 50% retracement of the move down in August at 107.178. If the price moved below the 106.32 level, we should see a wander back toward the 200 hour moving average at 106.116
  • USDCHF: The USDCHF rallied sharply and is closing right around its 200 hour moving average at 0.97614. That MA line will be the barometer for the bulls and bears in trading today. If the pair should correct lower, the 100 hour moving average at 0.9730 will be eyed.
  • USDCAD: The USDCAD has the 100 and 200 hour moving averages at 1.3243 and 1.32395 above (the price is closing at 1.3224). Stay below those MAs keeps the bears in charge in the new day.
  • AUDUSD: The AUDUSD is above its 100 and 200 day moving averages at 0.6780 (both are converged there. The price is trading at 0.6796 at the close. Stay above the 0.6780 would keep the bulls in control for the AUDUSD.

Wishing you all good fortune in your trading.

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