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    Morning Report – Tuesday 6th August




    Wall St. sinks as yuan slide inflames U.S.-China trade dispute

    (Reuters 06/08/2019) - Wall Street slumped on Monday and futures pointed to more losses to come after a fall in China’s yuan currency and U.S. President Donald Trump’s vow to impose additional tariffs on Chinese goods sparked an escalation of the U.S.-China trade war.

    S&P 500 futures EScv1 late in the day dropped over 1% after the United States officially designated China a currency manipulator, sharply escalating the ongoing dispute between the world’s two largest economies.

    U.S. Treasury Secretary Steven Mnuchin said in a statement that Washington will engage with the International Monetary Fund to eliminate unfair competition from Beijing.

    During Monday’s session, the benchmark S&P 500 slid about 3% to mark its biggest one-day percentage decline since Dec. 4. That slump amounted to a $766 billion loss on paper for the index, according to Refinitiv data.

    The S&P 500 has fallen for six consecutive sessions and is now about 6% below its record closing high on July 26.

    The drop in S&P 500 futures late on Monday suggests investors expect Wall Street to open with more losses on Tuesday.

    The yuan weakened past the key seven-per-dollar level to its lowest level in 11 years, after the People’s Bank of China, with the blessing of policymakers in Beijing, set its daily midpoint at the weakest level in eight months.

    Trump on Monday called the weakening of the yuan a “major violation,” and “currency manipulation” on Twitter.

    Several investors viewed the move in the Chinese currency as a direct response to Trump’s announcement of 10% tariffs on an additional $300 billion of imports from China.

    “It’s the escalation of the trade war,” said Steven DeSanctis, equity strategist at Jefferies in New York. “The dollar strengthening presents another issue. For companies that do a lot of business outside the U.S., it all adds up.”

    AUD/JPY drops to fresh 7-month low amid US-China tussle, all eyes on RBA

    (FXStreet 06/08/2019) - With the Japanese Yen (JPY) surging on the US-China tension and the Aussie traders waiting for the RBA, the AUD/JPY pair declines to fresh low since January before taking rounds to 71.30 during early Asian morning on Tuesday.

    The quote is on negative for the sixth consecutive day as political/trade tussle between the world’s two largest economies, including Australia’s biggest customer China, weigh on the Australian Dollar (AUD).
    Having witnessed fresh trade tariffs from the US President Donald Trump, China recently retaliated by letting its currency weaken against the US Dollar (USD) and also instructed to stop using the US agricultural products.

    Following that, the US Treasury Department released an official statement terming the dragon nation as the “currency manipulator”. As a result, investors rushed towards the safe havens, like the Japanese Yen (JPY), in search of risk safety.

    It should also be noted that the Australian Dollar (AUD) traders are also cautious ahead of the monetary policy meeting by the Reserve Bank of Australia (AUD) up for release at 04:30 GMT.

    While present trade/political tussle can keep exerting downside pressure on the pair, likely absence of a rate cut during the RBA meeting may help the quote recover some of its latest losses. Additionally, June month Trade Balance, expected 6,000M against 5,745M, will precede the RBA and can offer intermediate moves to the pair.


    Below are Trading Central's Intraday preference recommendations. Short (SELL) positions and long (BUY) positions have two targets issued which may be used as take profit levels. Above or below a certain figure indicates the pivot level which may be used as a level for stop loss.

    HANG SENG Daily – Short positions below 27550 with targets at 25590 & 24550.

    This is general advice only and does not take into account your personal circumstances. “It is the Policy of ForexCT to recommend the use of stop/loss function to reduce risk of significant losses to customers.

    CRUDE OIL 30 Minute – Short positions below 55.58 with targets at 53.61 & 52.97.

    EURUSD 30 Minute – Long positions above 1.1185.

    SP500 30 Minute – Short positions below 2877.00 with targets at 2805.00 & 2780.00.

    NIFTY Daily – The downside prevails as long as 11060 is resistance.

    SILVER Daily – Long positions above 15.9500 with targets at 16.6500 & 17.0000.

    NIKKEI Weekly – Short positions below 22350 with targets at 20300 & 18950.

    This is general advice only and does not take into account your personal circumstances. “It is the Policy of ForexCT to recommend the use of stop/loss function to reduce risk of significant losses to customers.

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    Risk Warning
    Trading FX and CFDs involves a substantial degree of risk and should only be undertaken with risk capital. Please consider our PDS and FSG before trading with us. A copy can be found on our website Forex Capital Trading Pty Ltd provides general advice that does not take into account your objectives, financial situation or needs. Investors do not own or have rights to underlying assets. Forex Capital Trading Pty Ltd is regulated by ASIC (AFSL 306400), ABN (69119086270). Forex Capital Trading Pty Ltd’s AFS license and Australian regulation only applies to the financial services being provided in Australia only.

    Posted: August 06, 2019 | 7:13 AM