Japanese Yen, US-China Trade War – TALKING POINTS

• The Japanese Yen is starkly aloft vs vital G10-peers
• AUD, NZD, NOK, SEK all humour amid risk aversion
• Crude oil prices, SP 500 futures opening lower: what next?

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The Japanese Yen is starkly aloft opposite a vital counterparts as US-China trade fight tensions light adult and are now echoing into Asia. Cycle-sensitive currencies like a Australian and New Zealand Dollars along with a Swedish Krona and Norwegian Krone are holding a brunt. Crude oil prices and SP 500 futures gapped reduce early into a event and will expected brief over into APAC equities.

Mind a Gap

USDJPY draft combined regulating TradingView

On Friday, US President Donald Trump tweeted several additional tariff measures Washington will levy opposite China. The initial is an boost of a $250 billion levy – set for Oct 1 – from 25% to 30%. The second tariff boost on $300 billion for Sep was lifted adult from 10% to 15%. Tensions between Beijing and Washington continue to light adult opposite a backdrop of a negligence tellurian economy.

The outcome of a ongoing trade fight – and now another probable front opposite a Atlantic – has shredded marketplace confidence, hampered cross-border investment and sapped ceiling inflationary pressure. Against a backdrop of slower tellurian expansion – in vast partial due to ongoing trade wars opposite a world – a reward has been placed on anti-risk resources as traders change from chasing yields to preserving capital.

Looking ahead, marketplace participants will be closely examination how China competence retaliate. Beijing has a series of collection during a disposal, one of that is utilizing a rare-earth vegetable anathema that could exceedingly interrupt a tech supply sequence for vital companies like Apple. Traders will also be closely examination a announcement of GDP information out of a US and several core European economies. If a reports tumble short, it could amplify risk hatred and strengthen a Yen.

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NZD/USD Technical ANALYSIS: BEARISH

• New Zealand Dollar contrast three-year lows opposite US counterpart
• Break of support might set a theatre for debility into a 0.62 figure
• NZD/USD on a verge of violation near-two-decade trend support

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The New Zealand Dollar sank to plea a Jan 2016 low during 0.6348 opposite a US reflection after clearing a Oct 2018 bottom during 0.6425, as expected. A serve downward pull sees a subsequent vital covering of support noted by four-year lows in a 0.6197-0.6245 area.

Alternatively, a miscarry behind above 0.6425 – now recast as insurgency – sets a theatre for a retest of a recently damaged support shelf in a 0.6482-96 zone. Invalidating a altogether bearish disposition would need distant steeper gains however: widespread trend insurgency now hovers only next 0.68.

NZD/USD daily draft combined regulating TradingView

Zooming out to a monthly chart, a latest downturn brings prices closer to confirming a mangle of support defining a NZD/USD uptrend for scarcely dual decades. Finishing Aug underneath it – a awaiting now only a week divided – would symbol a vital regime change and display a 0.5914-0.6197 region.

NZD/USD monthly draft combined regulating TradingView

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— Written by Ilya Spivak, Currency Strategist for DailyFX.com

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Gold Price Talking Points

The cost of bullion climbs to a uninformed yearly high ($1555) amid flourishing tensions between a US and China, and stream marketplace conditions are expected to keep bullion afloat as there appears to be a moody to safety.

Gold Prices Climb to Fresh 2019 High as US and China Boost Tariffs

Gold prices might continue to vaunt a bullish function as China boosts tariffs on a US, with President Donald Trump responding by announcing that “starting on Oct 1st, a 250 billion Dollars of products and products from China, now being taxed during 25%, will be taxed during 30%.”

In addition, a “remaining 300 billion Dollars of products and products from China, that was being taxed from Sep 1st during 10%, will now be taxed during 15%,” and a flourishing hazard of trade fight might spin a flourishing regard for a Federal Reserve as “trade process doubt seems to be personification a purpose in a tellurian slowdown.”

In turn, a Federal Open Market Committee (FOMC) might come underneath increasing vigour to exercise a rate easing cycle, though it stays to be seen if a executive bank will retreat a 4 rate hikes from 2018 as Chairman Jerome Powell argues that financial process “cannot produce a staid rulebook for general trade.”

Nevertheless, Fed Fund futures continue to simulate strenuous expectations for a 25bp rebate on Sep 18, with a total now display renewed conjecture for a 50bp rate cut as a ongoing change in trade process dampens a opinion for a US economy.

Little signs of a US-China trade understanding might pull a flourishing array of Fed officials to change their tune, and a FOMC might continue to change a brazen superintendence for financial process as “committee participants have generally reacted to these developments and a risks they poise by changeable down their projections of a suitable sovereign supports rate path.”

With that said, descending US Treasury yields along with a inverting produce bend might pull marketplace participants to sidestep opposite fiat currencies, and a risk of a process blunder might keep bullion prices afloat as there appears to be a moody to safety.

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Gold Price Daily Chart

Source: Trading View

• Keep in mind, the broader opinion for bullion prices sojourn constructive as both cost and a Relative Strength Index (RSI) clear a bearish trends from progressing this year.
• Moreover, bullion has damaged out of a near-term holding settlement following a unsuccessful try to close next a $1402 (78.6% expansion) region, with a RSI still tracking a bullish arrangement from April.
• More recently, bullion climbs to a uninformed yearly-high ($1555) following a unsuccessful attempts to tighten next a $1488 (61.8% expansion), though need break/close above $1554 (100% expansion) to open adult a Fibonacci overlie around $1629 (23.6% retracement) to $1634 (78.6% retracement).
• Will keep a tighten eye on a RSI as it works a proceed towards overbought territory, with a mangle above 70 expected to be accompanied by aloft bullion prices as a bullish movement gathers pace.

For some-more in-depth analysis, check out a 3Q 2019 Forecast for Gold

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ASEAN Fundamental Outlook

• The US Dollar rose contra SGD, PHP, MYR and INR this past week
• Resurgence in US-China trade fight tensions might keep pulling USD
• All eyes on US GDP, Rupee also confronting Indian Q2 enlargement information next

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US Dollar and ASEAN Week Recap

While a US Dollar underperformed opposite an normal of a vital counterparts this past week, it continued to aim aloft contra some of a ASEAN and Southeast Asian counterparts. Fed Chair Jerome Powell reinforced expectation of another 25-basis indicate rate cut in Sep during a debate during a executive bank’s annual mercantile process conference during Jackson Hole. Local supervision bond yields fell.

The resurgence in sensitivity during a same day as US-China trade fight tensions exhilarated adult approaching helped a Greenback outperform a Philippine Peso, Malaysian Ringgit, Singapore Dollar and Indian Rupee. Accompanying their decrease was a dump in a MSCI Emerging Markets Index as collateral was diverted out of building economies and into a reserve of US Treasuries.

One banking that managed to reason a belligerent was a Indonesian Rupiah even yet a executive bank assimilated a debauch of surprise easing seen via a world. Commitment to stabilise a IDR might have kept it from offered off. Meanwhile, a Singapore Dollar was pressured after a set of dismal internal acceleration data. Core Singapore CPI clocked in during 0.8% y/y contra 1.0% expected, a softest gait given Mar 2016.

US-China Trade Tensions Heat Up

In response to a US removing prepared to levy some of a additional $300b tariffs opposite China in September, a latter summarized skeleton for about $75b in retaliatory levies. Then in mid-December, when Donald Trump is approaching to levy a residue of a $300b in tariffs, Xi Jinping is approaching to resume 25% automobile tariffs opposite a world’s-largest economy.

Unsurprisingly, Mr Trump announced countermeasures amid threats from China to retaliate. After marketplace tighten on Friday, a US President pronounced that a now implemented $250b in Chinese tariffs will be lifted to a 30% rate from 25% on Oct 1. On tip of this, a additional $300b in levies will be lifted to a 15% tariff instead of a originally-designated 10% rate.

Continued doubt about a destiny of trade wars as tellurian enlargement slows has led executive banks from Malaysia, a Philippines, Indonesia and India to cut benchmark lending rates. With such tensions ostensible doubtful to be resolved in a near-term, serve movement from them to support enlargement could be a probability that weighs opposite MYR, PHP, IDR, INR and SGD as capital risks journey rising markets.

Will a US Economy Continue a Relative Outperformance?

With China’s economy chugging along during a slowest gait in over 30 years, signs of weakening enlargement from a United States (which is outperforming a grown counterparts) could intensify worries about a health and vitality of a universe economy. For that, all eyes are on internal information subsequent week such as durable products orders and a subsequent refurbish of second-quarter GDP. US retrogression fears have been on a rise.

While a Greenback could see some offered vigour opposite a vital counterparts, a haven-linked standing joined with a heightened risk of rising marketplace collateral moody gives it an top palm opposite a ASEAN peers. We will also accept Indian GDP that is approaching to delayed to 5.6% y/y in a second entertain from 5.8% before that might penetrate INR. These rates of enlargement were final seen in Q1 2014, over 5 years ago.

FX Trading Resources

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— Written by Daniel Dubrovsky, Currency Analyst for DailyFX.com

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New Zealand’s trade necessity widened in Jul from final year as exports declined amid an boost in imports, information expelled by Statistics New Zealand showed Monday.

Exports of products fell 5.8 percent annually to NZ$5 billion in July. Meanwhile, imports modernized 3.1 percent to NZ$5.7 billion.

Consequently, a trade change showed a necessity of NZ$685 million, bigger than a NZ$203 million shortfall seen in a same duration final year. The approaching necessity was NZ$254 million.

The statistical bureau pronounced a normal products trade change over a prior 5 Jul months was a necessity of NZ$427 million.

Data showed that exports to China grew 2.4 percent, while that to a U.S. declined 8.8 percent led by a tumble in beef exports. Exports to Australia modernized 0.8 percent.