Daily Commentary | 12/03/2018
Democrats want to widen Trade “overhaul”
• Democratic US Senator Warren stated yesterday that she is “not afraid of tariffs” and that the US needs a comprehensive rethinking of its trade policy. The statements seem similar to a silent consent of Trumps tariffs on the democratic side. On other news, South Koreas Finance minister announced that it will deploy all possible means to respond to US tariffs, while Europe and China underscore the consequences on the global economy of a possible trade war. Further negative headlines about retaliations could weaken the US Dollar.
• EUR/USD in a sideways manner on Friday below the 1.2355 (R1) resistance line, as the US employment report sent mixed messages. We see the case for the pair to continue to trade in a sideways manner, however it may prove sensitive to fundamental news especially about the any retaliations on the US tariffs. Should the pair come under buying interest we could see it breaking the 1.2355 (R1) resistance line and aim for the 1.2495(R2) resistance barrier. On the other hand should it come under selling interest we could see it breaking the 1.2230 (S1) support line and aim for 1.2100 (S2) support level.
Trump-Kim meetings to be of substance
• US state officials, stated on Sunday that the Trumps-Kim’s meetings are to be of substance and N.Korea is expected to halt any missile testing, in advance of the meeting. US Defense minister Mattis denied to comment on the situation as he characterized it “very delicate”. North Korea has kept silent until now, however S.Korean officials stated that its due most probably to caution and an effort to organize their stance. Any further positive headlines about the meeting could boost the US Dollar.
• USD/JPY rose on Friday, testing the 106.95 (R1) resistance line and breaking the downward trend-line incepted since the 8th of January. We see the case for the pair to trade in a sideways manner in the next couple of days however it may prove to be sensitive to any release of financial data or fundamental news. Should the bulls take over the market we see the case for the pair to break the 106.95 (R1) resistance line and aim for the 108.30 (R2) resistance hurdle. Should the bears take the driver’s seat we could see it breaking the 105.55 (S1) support line.
This week’s other economic highlights:
• Today is forecasted to be a rather quiet day regarding the release of financial data, while on Tuesday we get Japan’s Corp. Goods Prices for February, US Inflation Data for February and from the UK Philip Hamond delivers his Spring Statement. On Wednesday, China’s Industrial Production and Retail Sales for February and New Zealand’s GDP for Q4 will be released. On Thursday, we get the US Industrial Production data for February and on Friday Eurozone’s final inflation rate for February is due out.
• Support: 105.55 (S1), 104.66(S2), 103.65(S3)
• Resistance: 106.95(R1), 108.30(R2), 109.20(R3)
• Support: 1.2230(S1), 1.2100(S2), 1.1915(S3)
• Resistance: 1.2355(R1), 1.2495(R2), 1.2680(R3)