- AUD/JPY fails to sustain the week’s high as trade headlines flash mixed signals.
- Market fears ahead of the UK election also weigh on the risk tone.
- Global equities cheered Fed-led rally, await trade signals for fresh impulse.
AUD/JPY steps back from the week’s high while trading around 74.55 during the Asian session on Thursday. Increasing trade war risks and uncertainty surrounding the British election keep the traders guessing.
The recent headlines from CNBC and China’s Global Times portray Beijing’s fearless stand as far as the trade war with the United States (US) is concerned. However, Reuters relied on the story stating that the US President Donald Trump will meet the top trade advisers today to discuss tariffs n Chinese goods ahead of the December 15 deadline. One shouldn’t forget about Hong Kong and Taiwan that play back-end roles in the drama.
The US-China trade stalemate has been weighing on the risk sentiment off-late. With this, global equity traders are finding difficult to cheer the easy money policy and stimulus indication. Also adding weight on the risk tone is the United Kingdom’s (UK) election, up for today, as it holds the key to further Brexit proceedings and the UK’s future relations with the European Union (EU).
With this, the US 10-year treasury yields near the weekly low of 1.79% while S&P 500 Futures stay mostly unchanged to 3,145. It’s worth mentioning that Wall Street registered gains after the US Federal Reserve (Fed) Chairman struck a dovish tone while keeping the current monetary policy unchanged.
Assuming that the current US-China differences let the US extend its December 15 tariffs, a fresh trade war will derail the global equity strength and could also drag Wall Street off from record highs. The same might also be supportive of the safe-havens like the Japanese yen (JPY) and Gold. However, that depends upon how the market perceives the US dollar (USD) going forward.
“We have already seen disturbing slowdowns in business investment in the major economies partly in response to trade uncertainties and partly, more fundamentally, reflecting risk aversion and general caution. Trade uncertainty and political risks are unlikely to allay those concerns in 2020,” says Westpac.
Technical Analysis
Buyers look for entry beyond sustained trading beyond 61.8% Fibonacci retracement of November month fall and monthly resistance line, around 74.80/82. On the contrary, sellers can target 74.00 as nearby support.
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended content
Editors’ Picks
EUR/USD stays in positive territory above 1.0850 after US data
EUR/USD clings to modest daily gains above 1.0850 in the second half of the day on Friday. The improving risk mood makes it difficult for the US Dollar to hold its ground after PCE inflation data, helping the pair edge higher ahead of the weekend.
GBP/USD stabilizes above 1.2850 as risk mood improves
GBP/USD maintains recovery momentum and fluctuates above 1.2850 in the American session on Friday. The positive shift seen in risk mood doesn't allow the US Dollar to preserve its strength and supports the pair.
Gold rebounds above $2,380 as US yields stretch lower
Following a quiet European session, Gold gathers bullish momentum and trades decisively higher on the day above $2,380. The benchmark 10-year US Treasury bond yield loses more than 1% on the day after US PCE inflation data, fuelling XAU/USD's upside.
Avalanche price sets for a rally following retest of key support level
Avalanche (AVAX) price bounced off the $26.34 support level to trade at $27.95 as of Friday. Growing on-chain development activity indicates a potential bullish move in the coming days.
The election, Trump's Dollar policy, and the future of the Yen
After an assassination attempt on former President Donald Trump and drop out of President Biden, Kamala Harris has been endorsed as the Democratic candidate to compete against Trump in the upcoming November US presidential election.