- China announced tariffs on US soybeans, planes, cars, cattle and chemicals. The move was characterized by a surprise element as it was announced just eleven hours after the additional US tariffs were announced. Meetings followed, between China’s ambassador and US officials as well as diplomatic moves in the World Trade Organization. The climate was quickly reversed however as both sides seem to favor negotiations to resolve the issue instead of additional tariffs. Fears in the markets picked up at the beginning of Wednesday however quickly eased later on, as possible negotiations were announced and the markets rebounded along with the USD. Any further headlines about a positive outcome on the dispute could strengthen the USD.
- USD/JPY rose late on Wednesday and during today’s Asian morning as trade war fears eased and the pair tested the 106.95 (R1) resistance line. We see the case for the pair to continue to trade in a bullish mood should there be further headlines about a possible resolving of the tariffs issue. Should the bulls take the upper hand we could see the pair breaking the 106.95 (R1) resistance line and aim for the 108.30 (R2) resistance hurdle. Should the bears take the reins we could see the pair trading south towards the 105.55 (S1) support line.
Canada not ready for NAFTA deal yet - Canadian Foreign minister stated yesterday that good progress was made on the NAFTA trade pact but still have work to do. The three countries could announce by mid-April the outlines of a settlement on the key issues of auto content. Media reports state that Trump’s top economic advisor Kudlow, predicted yesterday that there would be some positive news on NAFTA and that the stock-market would love them. Overall, should there be any further positive headlines about NAFTA we could see the CAD strengthening.
- USD/CAD traded in a roller-coaster mood yesterday and during today’s Asian morning, breaking the 1.2800 (R1) resistance line twice, marking the lowest rates for the past two months. Should there be further positive headlines for a possible NAFTA agreement we could see the pair trading in a bearish mood. Should the pair find buying orders along its path we could see it breaking the 1.2800 (R1) resistance line and aiming for the 1.2910 (R2) resistance hurdle. Should it continue to be under selling interest we could see it breaking the 1.2715 (S1) support line and aiming for the 1.2610 (S1) support level.
In today’s other economic highlights: - During today’s European morning we get Germany’s Industrial Orders for February, eurozone’s Final Services PMI for March, Final Composite PMI for March, Retail Sales growth rate for February and UK’s Markit/CIPS Services PMI for March. In the North-American session we get from the US the Trade Balance Deficit for February and from Canada also the Trade Balance Deficit for February.
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