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America’s Roundup: Dollar falls on rising fears trade war will hit U.S. growth, Wall Street ends lower, Gold gains, Oil steadies as Saudi, Kuwait signals offset demand fears-August 13th,2019

Market Roundup

• Political uncertainty helps safe heaven assets rally

• Russia GDP Quarterly (YoY) 0.9%, previous 0.5%

• US Jul Federal Budget Balance  -120.0B, -120.0B forecast,-8.0B previous

Looking Ahead - Economic Data (GMT)

• 22:45 New Zealand Jul FPI (MoM) -0.7% previous.

• 23:50 Japan Jul PPI (MoM) 0.1% forecast,-0.5% previous

• 23:50 Japan Jul PPI (YoY) -0.5% forecast,-0.1% previous

• 23:50 Japan Jul PPI (YoY) -0.5% forecast,-0.1% previous

• 01:30 Australia Jul NAB Business Confidence  

• 01:30 Australia Jul NAB Business Confidence  

.Looking Ahead - Events, Other Releases (GMT)

• Australia RBA Assist Gov Kent Speaks  

Currency Summaries

EUR/USD: The euro edged higher against dollar on Monday, as the foreign exchange market fell into an August lull, a traditionally quiet trading period with many investors and traders on vacation. This week, market attention will be on Chinese retail sales and industrial output for July, due out on Wednesday, to gauge the trade war’s impact on domestic activity. Investors will also be focused on the U.S. Federal Reserve’s annual symposium at Jackson Hole, Wyoming, later this month, seeking greater clarity on the future path of interest rates. Markets are expecting two to three additional rate cuts from the Fed by the end of the year. The euro was up 0.13 percent at $1.1212. An index that tracks the dollar versus a basket of six major currencies was down 0.42 at 97.44 Immediate resistance can be seen at 1.1232 (Daily high), an upside break can trigger rise towards 1.1274 (Higher Bollinger Band).On the downside, immediate support is seen at 1.1161 (Daily Low), a break below could take the pair towards 1.1100 (Psychological level).

GBP/USD: Sterling clawed back some ground on Monday, benefiting from political ructions in Italy that hit the euro, but concerns over Brexit kept the UK currency within sight of multi-year lows. The pound gained some ground, after Deputy Prime Minister Matteo Salvini threatened to bring down Italy’s coalition government. An unexpected second-quarter contraction in Britain’s economy had late last week sharpened the market focus on fears that the country will crash out of the European Union at the end of October without a transitional deal. Low liquidity and media reports that Ireland will not renegotiate the Brexit backstop at an expected meeting with British Prime Minister Boris Johnson this month also weakened sterling.  Immediate resistance can be seen at 1.2108 (5 DMA), an upside break can trigger rise towards 1.2134 (11 DMA).On the downside, immediate support is seen at 1.2013 (Daily Low), a break below could take the pair towards 1.1962 (Lower Bollinger).

USD/CAD: The Canadian dollar weakened against its U.S. counterpart on Monday, holding on to gains from the last two sessions as oil prices rose, while investors worried about a prolonged U.S.-China trade conflict. The price of oil, one of Canada’s major exports, gained despite worries about a global economic slowdown and the ongoing trade war between the United States and China, which weighed on global stock markets . U.S. crude oil futures were up nearly 1% at $55.04 a barrel. (1347 GMT), the Canadian dollar was trading nearly unchanged at 1.3235 to the greenback. The currency, which last Wednesday hit its weakest intraday level in seven weeks at 1.3344, traded in a range of 1.3207 to 1.3250.Immediate resistance can be seen at 1.3270 (Aug 19th high), an upside break can trigger rise towards 1.3343 (Higher Bollinger Bands). On the downside, immediate support is seen at 1.3194 (9th Aug low), a break below could take the pair towards 1.3137 (21 DMA).

USD/JPY: The U.S. dollar declined against the yen on Monday, as investors ramped up bets that the Japanese currency could gain more in the case of a prolonged China-U.S. trade conflict.  Apart from its status as a perceived safe-haven currency which gains during periods of economic stress, the yen was also benefiting from growing expectations that the U.S. dollar may be ending a period of extended weakness after recent comments. Strong resistance can be seen at 105.93 (5 DMA), an upside break can trigger rise towards 106.72 (10 DMA).On the downside, immediate support is seen at 105.00 (Psychological level), a break below could take the pair towards 104.64 (Lower Bollinger Band). 

Equities Recap

European shares fell on Monday, with banks leading the decline, as worries that the protracted U.S.-China trade war could push the global economy into recession sent investors scurrying to safer assets.

UK's benchmark FTSE 100 closed down by 0.37 percent, Germany's Dax ended down by 0.12 percent, France’s CAC finished the day up by 0.26 percent.

U.S. stocks slipped on Monday as political tensions around the world and fears that a prolonged U.S.-China trade war would push the global economy into recession sapped risk appetite.

Dow Jones closed up by 1.48 percent, S&P 500 ended up by 1.23 percent, Nasdaq finished the down up by 1.20 percent.

Treasuries Recap

U.S. Treasury yields fell on Monday, in line with the weak stock market, as trade worries and global political tensions in places such as Hong Kong and Argentina supported safe-haven assets.

The U.S. yield curve has also flattened significantly, suggesting mounting anxiety. The yield spread between U.S. 2-year and 10-year notes, a closely watched metric, narrowed to 5.3 basis points, the smallest difference since at least 2010.

Commodities Recap

Gold prices rose on Monday and stayed above the key $1,500 per ounce psychological level, as stock markets slipped on concerns about global economic growth and the U.S.-China trade dispute, triggering safe haven bids.

Spot gold was up 0.6% at $1,505.92 per ounce at 1:44 p.m. EDT (1744 GMT), holding close to last week’s more than six-year high of $1,510. U.S. gold futures settled up 0.6% at $1,517.20 an ounce.

Oil prices were little changed on Monday as expectations that major producers would continue to reduce global supplies ran into worries about sluggish growth in crude demand due to the U.S.-China trade war.

International benchmark Brent crude settled at $58.57 a barrel, up 4 cents. West Texas Intermediate (WTI) futures settled at $54.93, up 43 cents.

By Srikanth G
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