Sentiment has soured on Wall Street and investors are rethinking their risk-on approach to U.S. equities. At the half-way point of the American session, the DJIA DOW (-205), S&P 500 SPX (-20), and NASDAQ (-31) are trending south. Safe-havens are getting a bump, led by a 1.15% gain in gold. For the time being, U.S./China trade war angst, impeachment, and a dovish FED are dominating the financial markets.

China Troubles And Impeachment Headlines Dominate U.S. Session

Earlier today, the U.S. House of Representatives passed a resolution to move forward with a public impeachment inquiry vs Donald Trump. The final tally of the vote came in at 232 to 196, with the result being split among party lines.

In addition to the House vote, reports have begun to surface that the signing of a “Phase 1” U.S. and China trade deal has been postponed. Following the cancellation of the November 16-17 APEC Summit by host nation Chile, both parties are supposedly searching for another place to finalize the agreement. 

Thus far today, impeachment and trade war angst are dominating the U.S. session. At this point, one has to question if the two issues are related. Do the prospects of a Trump impeachment give China leverage regarding a potential trade deal? If Trump is formally impeached, is there any hurry for China to sign a less-than-favorable agreement? 

With the 2020 election and Trump’s impeachment in view, it is plausible that Chinese negotiators may take their time before agreeing to a comprehensive trade deal. With the prospect of Trump vacating the White House in a little over 13 months, where is China’s motivation to make any concessions to the U.S.?

Safe-Havens Bang Higher On Geopolitical Angst

Today is the final trading day of October and institutional players are taking risk off the table. Safe-havens are on the march, led by gold, the Swiss franc, and Japanese yen. 

At press time, the USD/JPY is in a relative free-fall. Here are a few support levels to watch until Friday’s closing bell:

• Support(1): 62% Current Wave Retracement, 107.55
• Support(2): Psyche Level, 107.00

Bottom Line: Friday marks November 1st and a likely spike in participation across the markets. In the event safe-havens continue to rally, a long in the USD/JPY may come into play.

Until elected, I will have buy orders queued up from just above the 62% Retracement at 107.61. With an initial stop at 107.19, this trade produces 35 pips on a sub-1:1 risk vs reward management plan.