Trump Administration Imposes New Tariff on Chinese Imports
- 13 May 2019
Fundamental Outlook President Trump complains of slow progress in trade talk with China and slaps new tariffs on USD200 billion worth of Chinese imports. Trump administration also threatens on imposing tariffs on a new list of Chinese goods worth USD325 billion.
Last Friday, China‘s Vice Premier Liu He revisited Washington to continue the trade talk despite the impact of rising tariffs by U.S. Government. Back in Beijing, Chinese Government makes news release that they are regretful to hear of the U.S. action but will retaliate with trade tariffs in due time. On Friday, Dow markets recovered after trade talk resumed and traders expect positive outcome in coming weeks.
U.K. grew 0.5 percent in Q1 seasons and matched forecast. Industrial production gained 0.9 percent and maintained positive growth for third consecutive month.
The U.S. – Iran tension increases as Pentagon sends warship to Middle East. Crude prices fall amid U.S.-China trade war resumes as Trump administration imposes new tariffs on Chinese goods. Gold demand has stabilized as a safe haven to market volatility.
Technical Forecast USD/JPY slid last week as we predicted. Market has been supported at 109.50 region and likely to regain recovery this week. Technically, we foresee the trend will move in tight range from 109.50 – 111.00 region this week amid mixed trading. Risk control is advised in case of extending beyond the aforementioned range.
EUR/USD has been sitting tight on 1.1150 support but did not climb that high as we expected. This week, we reckon the trend will be supported at 1.1180 area and prone to surge higher. Target is identified at 1.1330 region and need further observation in case of stronger rise. Theoretically, we recommend traders to observe the Dollar Index (USDX) trend for a potential inverse relationship to Euro trend.
GBP/USD has shown a strong potential in falling after the traders gradually lost interest in Pound. Market has topped off 1.3180 level recently and likely to continue fall in near future. This week, we foresee the selling pressure will build up at 1.3100 area in case of temporary pull-up. On hind side, support is identified at 1.2880 area and we expect the overall trend to fall this week.
Gold prices traded in a very narrow range from USD1275 – USD1290 /oz last week as the direction was not cleared. This week, it will depend largely on the Dollar trend to initiate an inverse trend in Gold movement. However, downside support is much protected at USD1265 /oz region in case of deeper slide. On the other hand, the upside potential is more aggressive if the trend pierces above USD1290 /oz and likely to attain USD1310 /oz region.
WTI Crude prices traded in flat prices from USD61 – USD62 /barrel throughout last week. Market refuses to fall despite some selling forces have been trigger from resurging trade war between U.S. – China. Tension in Middle East with the rising sanction on Iran has put much attention of Crude prices in case of geo-political risk erupts soon. This week, we would expand our target range from USD59 – USD63 /barrel to contain the market movement and observe for a potential breakthrough in either direction.
Silver prices traded largely from USD14.70 – USD15.00 /oz last week. Technically, we reckon the support is very resilient at USD14.60 /oz region in case of falling this week. On the other hand, traders are waiting for the pierce above USD15.00 /oz that carries the potential to drive up to USD15.50 /oz once the bulls gather strength. By observing the XAU/XAG ratio that is prone to slide from current 87.00 high, we expect the Silver is soon to outrun the gains than yellow metal.
Crude Palm Oil (FCPO) Futures on Bursa Derivatives has maintained sluggish sentiment in market. Partial reason for FCPO weakness is the lower demand for edible oils and U.S. – China trade war resurgence. We reckon the reversal trend will occur only after the rollover week. July Futures contract closed at RM1984 /MT on Friday and will prepare to rollover to August contract as active month on 15 May. This week, we expect the support will emerge at RM1950 /MT and tend to regain recovery at RM2020 /MT area.
DAR Wong has 30 years of trading and hedging experiences in global financial markets. The opinion is solely at his own. He can be reached at firstname.lastname@example.org