In a
move that is likely to cause the further deterioration of US - China trade
relations, the United States will begin imposing 25% tariffs on $16 billion of Chinese
imports starting from 23 August. With Beijing expected to fight back by
targeting $16 billion worth of US goods with equal tariffs, the US - China
trade saga could get even messier.
Asian
stocks closed mixed on Wednesday as investors focused on positive US earnings
and expectations that China will stimulate its economy amid the deepening trade
tensions. In Europe, shares have already edged lower this morning and could
remain pressured as US - China trade tensions encourage market players to adopt
a guarded approach to riskier assets.
Pound gripped by
Brexit no-deal fears
Sterling
was pounded by the Dollar and most of its major counterparts on Wednesday as
fears heightened over the UK exiting the European Union without a trade deal in
place.
Concerns
of a potential hard Brexit scenario have haunted investor attraction towards
the Pound and have left the currency vulnerable to downside shocks. The
currency is likely to remain depressed ahead of Friday’s second quarter UK GDP
report, which could offer fresh insight into the health of Britain’s economy.
While a solid GDP print could throw the bruised Pound a short-term lifeline,
any meaningful gains may be obstructed by Brexit-related uncertainty and an
appreciating Dollar.
Regarding
the technical picture, we remain bearish on the GBPUSD on the daily charts.
Bears have maintained firm control under the 1.3000 level with prices currently
challenging 1.2900. A solid daily close below this level could encourage a
decline towards 1.2860 and 1.2790, respectively.
Bitcoin tumbles
below $6500
Investors
who were looking for a fresh opportunity to attack Bitcoin were given the
thumbs up after the US Security and Exchange Commission (SEC) postponed its
decision on approving the first ever Bitcoin ETF.
The
selloff witnessed on Bitcoin continues to highlight how extremely sensitive the
cryptocurrency remains to the ETF developments. Cryptocurrencies could receive
a solid boost and end up becoming the main talking point across financial
markets if the SEC approves a Bitcoin ETF in September.
Taking
a look at the technical picture, Bitcoin is under pressure on the daily charts
with prices trading marginally below $6500 as of writing. Sustained weakness
below $6500 could encourage bears to drag prices towards $6250. Although the
current trajectory for Bitcoin is tilted to the downside, the outlook could
change if a Bitcoin ETF becomes reality.
Currency
spotlight – EURUSD
The
medium to longer-term outlook for the EURUSD remains bearish due to the
monetary policy divergence between the Federal Reserve and European Central
Bank.
Regarding
the technical picture, a rebound seems to be in process on the daily charts
with prices trading towards the 1.1630 dynamic resistance. Sustained weakness
below this level could encourage a decline back towards 1.1550 and 1.1508,
respectively. If bulls are able to break above 1.1630, then prices have scope
to challenge the 1.1700 level.
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