The Trade War Topic Dominates on the Markets (Weekly Review)

The topic of a trade war between the US and China dominated on the financial markets last week. The Reserve Bank of New Zealand decreasing the interest rate triggered the sale of the NZD, but after testing the level of 0.6379 paired with the USD, it was able to adjust around the 65th figure. The AUD managed to gain back losses, despite the trade conflict, but both currencies remain vulnerable, and the lows of the week can be tested again.

Donald Trump's expansion of trade duties on Chinese goods triggered a powerful wave of sales on stock exchanges, which helped maintain demand for the Japanese yen. Its rebound against the dollar from the highs was used for purchases, although indexes later showed positive dynamics thanks to the companies’ buyback of their shares. However, in the absence of any progress in the negotiations between the United States and China, the growth of indices can be used to take profits on long positions, which may continue to support the JPY.

Anti-risk sentiment also contributed to the demand for such ‘safe-haven’ assets as the Swiss franc and gold. The precious metal was thus able to renew its highs, but the growth of the franc against the USD was limited by the 97th figure, since the interest rate differential still does not justify large-scale USD sales per CHF, and its attempts to break through to the 99th figure are still possible. The loss of the 97th figure may increase pressure on the USD.

Schedule for this week:

Monday, August 12
18:00 GMT - USA. Federal Budget Balance (Jul).

Tuesday, August 13
06:00 GMT - Germany. Harmonised Index of Consumer Prices (HICP);
08:30 GMT – United Kingdom. ILO Unemployment Rate (3M) (Jun);
08:30 GMT - United Kingdom. Average Earnings ex Bonus (3M) (Jun);
09:00 GMT - Germany. ZEW Economic Sentiment;
12:30 GMT – USA. Consumer Price Index (CPI);
12:30 GMT - USA. Core Consumer Price Index (CPI).

Wednesday, August 14
00:30 GMT - Australia. Westpac Consumer Sentiment;
02:00 GMT - PRC. Industrial Production;
02:00 GMT - PRC. Retail Sales;
06:00 GMT - Germany. GDP (QoQ) (Q2);
07:30 GMT - Australia. Reserve Bank of Australia Assistant Governor Debelle Speaks;
08:30 GMT - United Kingdom. Consumer Price Index (CPI);
08:30 GMT - United Kingdom. Core Consumer Price Index (CPI);
09:00 GMT - Eurozone. Industrial Production;
09:00 GMT - Eurozone. GDP.

Thursday, August 15
01:00 GMT - Australia. MI Inflation Expectations;
01:00 GMT - Australia. Participation Rate;
01:00 GMT - Australia. Unemployment Rate;
04:30 GMT - Japan. Industrial Production;
08:30 GMT - United Kingdom. Retail Sales;
12:30 GMT - USA. Initial Jobless Claims;
12:30 GMT - USA. Retail Sales;
16:15 GMT - USA. Industrial Production.

Friday, August 16
07:00 GMT - Japan. Foreign Direct Investment (FDI);
09:00 GMT - Eurozone. Trade Balance;
12:30 GMT - USA. Housing Starts;
14:00 GMT - USA. Michigan Consumer Sentiment.

Author: Anthony Porter, IAFT Analyst