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    Afternoon Report – Monday 5th August

    THE DAILY REPORT

    AFTERNOON REPORT

    TOP THINGS TO KNOW

    China lets yuan slump past 7 per dollar for first time in over decade as trade war escalates

    (Reuters 05/08/2019) - China on Monday let the yuan tumble beyond the key 7-per-dollar level for the first time in more than a decade, in a sign Beijing might be willing to tolerate further currency weakness in the face of an escalating trade row with the United States.

    The sharp 1.4% drop in the yuan came after the People's Bank of China (PBOC) set the daily mid-point of the currency's trading band CNY=PBOC at 6.9225 per dollar, its weakest level since December 2018.

    “Today’s fixing was the last line in the sand,” said Ken Cheung, senior Asian FX strategist at Mizuho Bank in Hong Kong.

    “The PBOC has fully given the green light to yuan depreciation”

    The shakeout in the yuan comes days after U.S. President Donald Trump stunned financial markets by vowing to impose 10% tariffs on the remaining $300 billion of Chinese imports from Sept. 1, abruptly breaking a brief month-long ceasefire in the bruising trade war.

    “The fact that they have now stopped defending 7.00 against the dollar suggests that they have all but abandoned hopes for a trade deal with the U.S.,” he said.

    Oil prices drop as U.S.-China trade war fuels growth concerns

    (Reuters 05/08/2019) - Oil prices fell on Monday amid renewed global economic growth concerns after U.S. President Donald Trump vowed to escalate the trade war with China with more tariffs, which would likely limit fuel demand in the world’s two biggest crude consumers.

    Asian equity markets dropped to a six-month low on Monday while gold prices climbed as investors sought safe-haven assets because of the ratcheting up of the trade dispute between China and the United States, the world’s two largest economies.

    “Crude oil futures experienced significant headwinds as global risk appetites remain feeble over subdued global growth and a sudden escalation in the Sino-U.S. trade dispute,” said Benjamin Lu, commodities analyst at Singapore-based brokerage Phillip Futures.

    Signs of rising oil exports from the United States also pressured prices on Monday. U.S. shipments surged by 260,000 barrels per day (bpd) in June to a monthly record of 3.16 million bpd, U.S. Census Bureau showed on Friday.

    The trade war and rising supply should accelerate the trend of speculators reducing their bullish positions in the WTI futures markets.

    Speculators cut bullish wagers on U.S. crude in the week to July 30 while bearish wagers rose to their highest since February, the U.S. Commodity Futures Trading Commission (CFTC) said on Friday

    GBP Futures: further downside not ruled out

    Open interest in GBP futures markets rose for yet another session on Friday, this time by around 4.4K contracts, according to preliminary data from CME Group. On the other hand, volume shrunk for the second consecutive day, now by around 58K contracts.

    GBP/USD faces tough resistance at 1.2200

    Cable remains sidelined below the 1.2200 handle for the time being. While rising open interest on Friday allows for some extension of the rebound, declining volume could keep favouring either some consolidation or a resumption of the recent down move.

    TRADE OPPORTUNITIES

    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 30 Minute – Short positions below 26500 with targets at 25900 & 25650.

    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 55.55 with targets at 54.75 & 54.15.

    SP500 30 Minute – Short positions below 2944.00 with targets at 2915.00 & 2895.00.

    EURUSD 30 Minute – Long positions above 1.1100 with targets at 1.1135 & 1.1160.

    NIKKEI 30 Minute – Short positions below 20740 with targets at 20520 & 20415

    SUGAR Daily – Buy above 11.57, short term rebound towards 12.86.

    NIFTY Daily – The downside prevails as long as 11249 is resistance.

    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.

    Economic Announcements
    (times in AEST)

    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 www.forexct.com.au. 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 | 12:50 AM