Trump & Xi On A Blind Date With Consequences – April 6th Morning Brief
Arslan Butt • 3 min read
As we know the first week of every month is considered extremely important due to the release of the Non-farm payroll and unemployment rates from the United States. However, the first week of April, in particular, is offering excitement beyond the routine fundamentals. I'm talking about the Trump & Xi summit today. The two are supposed to meet to talk about the various issues as explained in our special update entitled Donald Trump- Xi Jinping Summit Catching Heat!.
Today, the global stock markets are under pressure and are trading lower in the early Asian sessions. For example, the S&P 500 dipped -0.23%, Nasdaq fell nearly -0.29% and DJIA dropped -0.20%. The Asian stock market, in particular, the Nikkei index tumbled -1.50% this morning. It's pretty clear that investors already feel threatened by the uncertainty brought on by the blind date between the Trump and Xi. Aside from this, we really don't have many economic events on the table today.
Top Economic Events To Watch Today
- German Factory Orders m/m (7:00)
- ECB Monetary Policy Meeting Accounts (21:00)
- CPI m/m (8:15)
- Building Permits m/m (13:30)
- Unemployment Claims (13:30)
EUR/USD – Loving The Sideways Trend
It's been five straight trading days that the EUR/USD is consolidating in a range of $1.0650 – $1.0699. Honestly, it's making the market pretty boring.
Yesterday, the EUR/USD was about to break the trading range on the release of remarkable ADP figures from the United States. The data showed an increase in private payrolls of 263K for the month of March which was much higher than the expected 188K. But later on worse than expected US ISM non-manufacturing index jumped in to weaken the greenback.
Today, we have the ECB Monetary Policy Meeting Accounts at 21:00 GMT and in my opinion, it will be worth watching. The economic conditions in the Eurozone are getting better and better which is putting pressure on the ECB's President Mario Draghi to go for a contractionary monetary policy.
EURUSD – 4 Hours Chart
Technical Outlook – Intraday
In the 4-hour chart, the EUR/USD is trading closer to the upper range of $1.0703. On the lower end, it has formed a major triple bottom support at $1.0632. Our technical friends EMA and RSI (below 50) are signaling a bearish bias for the pair.
Forex Trading Signal: This situation leaves us with two options.
First – We can trade in a range. Buying at $1.0632 with a stop loss below $1.0606 and selling at the upper range of $1.0705 with a stop loss of $1.07220.
Second – We can wait for the market to give us a clear trend before we enter the market. This is likely to happen tomorrow after the release of U.S labor market figures.
USD/JPY – Renewed Safe Haven Appeal
The safe haven currency pair dropped again to place a low of $110.279 in the early Asian session today. This is happening for the same reason discussed above. Investors are nervous due to Donald & Xi summit today.
Besides that, the FOMC meeting minutes increased the uncertainty over the interest rate hike sentiments. After studying their meeting minutes, I feel that the FED officials are uncertain and are waiting to see how the Trump administration's fiscal policies are likely to affect the economy.
Consequently, their sentiment on the upcoming rate hikes seems to be changed, but let's wait and see. We have some major events ahead which may influence the rate hike decisions.
USDJPY – Daily Chart
Technical Outlook- Intraday
I really enjoy trading USD/JPY since the pair is offering very simple trade setups. Let's have a look at the hourly chart: We can see that pair is having a major support at the double bottom level of $110.320. I would like to add that $110.320 is not only a double bottom level but also a trendline support level. In addition, the pair is trading below 50 periods EMA and the RSI is holding in a selling territory. We can't ignore the bearish engulfing candle in the 4-hour chart which demonstrates a strong bearish trend.
Forex Trading Signal: Although all the technical tools are extending support to the bearish sentiment, we need to wait for the market to break below a trendline support of $110.300 to add any sell positions. Else, the pair has chances to hold above $110.300.
Fellows, we can expect volatility upon any update from the Trump & Xi meeting. But prior to that, the market is likely to stay calm. Most traders are relaxing before the big day tomorrow – NFP day!