US – China trade war subdued for the moment, but concern grows over economic data
Stock markets started the day strongly encouraged by optimism about the recovery of the economy as a result of the reopening of economic activity worldwide and the best data on the spread of the disease that seems to have peaked and is receding in the central countries.
US macro data
But that first bullish momentum slowly faded throughout the session.
The economic data published in the United States: New Home Sales and Consumer Confidence were not entirely bad, particularly that of home sales.
This showed a surprising increase of 0.6%, indicating that the pandemic is not currently affecting the real estate market.
But there are still dark clouds on the horizon that need to be adequately resolved so that the market can take a real bullish momentum.
These are a vaccine and/or treatment for the disease, from the health side, and the easing of tension between the United States and China, from the economic point of view.
For the first, there are already reasonable indications. Still, inevitably it will take a long time to develop. For relations between the Trump administration and the Chinese government, everything will depend on the decisions made in the United States. Still, currently, everything points to it can get worse.
In this scenario, the North American indices have experienced slight gains except TECH100, which fell around 0.70%. It must be taken into account that the technological index is the one that has had the best performance during the crisis and is already close to pre-crisis levels.
USA500 was gaining around 0.47% and encountering resistance at the 200 days SMA level at 3007.
With the market risk-on mode, the US Dollar was no longer bought as a safe haven and experienced a drop across the board. It is a logical consequence if we consider its levels of interest rates at historic lows and the notable increase in the money supply, which leads most analysts to anticipate an even weaker Dollar in a world without crisis, something that is still far from being achieved.
Amid this weakness, GBP/USD has risen sharply by 1.25% in a move that can still be considered corrective. As shown in the graphic, it has made a pull-back to the reversal pattern's neckline.
The British Pound still has many fronts open, from the current crisis in the British government to the more than likely cut in the Bank of England's interest rates through the Brexit negotiations. However, it has smoothed in recent days may still find difficulties in the future.
GOLD has behaved quite negatively. While a risk appetite market is not the most favorable for the precious metal, a weak Dollar should have supported it. However, GOLD has suffered a considerable drop of almost 1%. Technically it remains in an uptrend in both the medium and short term and has its primary support in the area around $1700 where the last uptrend line passes.
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