Stocks down, interest rates down and yields down. Down Down Down.

US-China Trade war, Brexit uncertainty, Global economy slowdown on top of these, the anticipation of recession are the key driver for the appreciation in Bonds, Gold, and Yen. Flipside, commodity currencies are beaten down, and the Brent has entered the bear market.

August 09: A mega week for financial markets, so far. It’s been a highly eventful week for financial markets; all the asset classes responded wildly.

Events:

·        President Trump announced that a 10% tariff on 300bn$ in goods from China, which will be effective from September 01.

·        RBNZ: The Official Cash Rate (OCR) is reduced by 50 basis points to 1.0 percent vs. 25bps forecast.

·        Risk-averse investors shifted to the safe-haven assets, including Yen and Gold.

Insights: 

  • The safe-haven currency Yen reached a milestone this week, with the USDJPY finally fell below June 2019 low, made a low at 105.50. Now we focus on the three-year support trendline located between 105.00-104.50.

Flipside, the resistance zone remains between 107.00-107.30. Interestingly the daily RSI has been making higher low formation.

  • In the same pocket, Gold continued to break out higher, finally hit 1510$ on Wednesday.  Has surged above 1500$ mark for the first time since Sep 2013. Besides, Silver too breaking higher, hit 17.25$. We continue to forecast bullish targets on both Gold and Silver, but Silver leads in the coming weeks.

Both are consolidating in a narrow zone between $1490-1510 and $16.80-17.30$ respectively.

  • After President Trump announced new tariff, USDCNH finally through the 7.00 psychological level, made a high at 7.15.
  • Brent crude oil enters to bear market, fell 20.00% from the recent April peak.  Due to the slowdown in world economy inventories are rising, which cause the prices to come down eventually. In the medium-term, the price of Brent may fall towards $52.00-50.00 suggested by the A-B-C corrective structure.

NOTE: AUDUSD and NZDUSD sits at the extremely oversold condition

 

It is important to always keep in mind the risks involved in trading with leveraged instruments.

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