Investors remained wary as the world’s two largest economies remained locked in a looming trade war. Trade Tensions Resurfaced as China slapped extra tariffs of up to 25 % on about US$3 billion worth of US imports, hitting 128 American products. How the is the US Dollar affected? Let’s take a look at this 3 April US Dollar Analysis.
3 April, ADS Securities – The start of the week was slow as expected yesterday as European investors were still on holiday and with a lack of fresh data eco, the focus was mainly on the geopolitical arena.
Trade Tensions Resurface: 3 April US Dollar Analysis
Concerns about a trade war re-escalation after China’s decision to impose $3 billion tariffs on US products and a bearish first session for the new month in the US stock market sent the Dollar lower. The commodity currencies are leading the gains versus the greenback with the Australian, Canadian and New Zealand Dollars all testing last week’s highs with a view to breaking to the upside.
The economic calendar is relatively empty today and the only piece of news worth keeping an eye on is the UK Manufacturing PMI. The report is expected to print slightly softer this month but the focus will be on Thursday’s Services reading.
Analysts are predicting an equally lower reading which should keep Sterling under pressure but with the Bank of England keen to raise rates over the next few months we don’t foresee a sustained break of the 1.40 floor.
Non-Farm Payrolls report USD Impact
The European majors have been consolidating before and after the Easter holidays and the key question now is whether we will see a correction higher from the current levels or whether Dollar’s rally will pick up momentum once again. We believe that it will all depend on Friday’s Non-Farm Payrolls figures and the price action will be limited until then.
Even though there are a couple of US-related data reports in the interim which are expected to print lower investors will want to wait until Friday’s labor market figures before deciding on Dollar’s outlook.
The Asian equity markets are trading lower this morning on the back of a bearish session for US stocks. News that Apple plans to start using their own chips in Mac computers in 2020 sparked a tech stocks sell-off that took the Dow Jones all the way to last week’s lows.
The European futures are trending lower reflecting the bearish short-term bias in place so it looks like a negative start of the month and the quarter for equities on both sides of the Atlantic. Gold is gaining on the back of Dollar’s decline, prices rallied to $1,345 yesterday and even though the momentum is easing further gains will take the yellow metal towards the $1,355 area.
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