All quiet on the trade war front

It’s all quiet on the trade war front, but for how long is anyone’s guess. Fading trade drama and the nonfarm payrolls hangover lifted Wall Street at today’s open. The Dow Jones Industrial Average has stormed out of the gate, rising 191 points (as of 13:45 GMT) while the S&P 500 gained 16 points. Some traders believe the higher than expected unemployment rate and the drop in average hourly earnings may slow the pace of rate increases. Others think the variances were anomalies attributed to more people looking for work. 

WTI oil prices are bouncing in a $72.10/barrel-$74.75/b range. Oil bulls expect higher rates from rising global demand, pending US sanctions on Iran crude exports and supply disruptions. Oil bears see lower prices because of expectations of a trade war will reduce demand even as Opec and Russia are increasing prices. 

Sterling’s Asia/European morning rally after UK PM Theresa May’s cabinet agreed to a Brexit negotiating strategy ignored the news that Brexit Chief negotiator David Davis resignation. He wasn’t happy with the plan. Foreign Secretary Boris Johnston wasn’t either. He signed the document after describing it as a “polished turd.”  He resigned around 14:00 GMT, and GBPUSD dropped from 1.3350 to 1.3260. A break below 1.3250 targets 1.3190.

The lack of trade drama helped to power AUD/USD higher. The uptrend from the end of June low is intact above 0.7400 and today’s break above resistance at 0.7442 targets 0.7580 if 0.7490 is broken decisively. However, the long-term downtrend is intact supported by the different Reserve Bank of Australia/Fed interest rate policies and the ongoing China/US trade skirmish.


Chart:  AUDUSD 4-hour:

Enlarge
Source: Saxo Bank

You can access both of our platforms from a single Saxo account.

Disclaimer

Saxo Capital Markets (Australia) Pty Ltd prepares and distributes information/research produced within the Saxo Bank Group for informational purposes only. In addition to the disclaimer below, if any general advice is provided, such advice does not take into account your individual objectives, financial situation or needs. You should consider the appropriateness of trading any financial instrument as trading can result in losses that exceed your initial investment. Please refer to our Analysis Disclaimer, and our Combined Financial Services Guide and Product Disclosure Statement. All legal documentation and disclaimers can be found at https://www.home.saxo/en-au/legal/.

The Saxo Bank Group entities each provide execution-only service. Access and use of Saxo News & Research and any Saxo Bank Group website are subject to (i) the Terms of Use; (ii) the full Disclaimer; and (iii) the Risk Warning in addition (where relevant) to the terms governing the use of the website of a member of the Saxo Bank Group.

Saxo News & Research is provided for informational purposes, does not contain (and should not be construed as containing) financial, investment, tax or trading advice or advice of any sort offered, recommended or endorsed by Saxo Bank Group and should not be construed as a record of our trading prices, or as an offer, incentive or solicitation for the subscription, sale or purchase in any financial instrument. No representation or warranty is given as to the accuracy or completeness of this information. All trading or investments you make must be pursuant to your own unprompted and informed self-directed decision. No Saxo Bank Group entity shall be liable for any losses that you may sustain as a result of any investment decision made in reliance on information on Saxo News & Research.

To the extent that any content is construed as investment research, such content was not intended to and has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such, would be considered as a marketing communication.

Please read our disclaimers:
- Full Disclaimer (https://www.home.saxo/en-au/legal/disclaimer/saxo-disclaimer)
- Analysis Disclaimer (https://www.home.saxo/en-au/legal/analysis-disclaimer/saxo-analysis-disclaimer)
- Notification on Non-Independent Investment Research (https://www.home.saxo/legal/niird/notification)