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    Morning Report – Wednesday 31st July

    THE DAILY REPORT

    MORNING REPORT


    TOP THINGS TO KNOW

    Tech pulls Wall Street lower on Trump trade warning

    (Reuters 30/07/2019) - Wall Street lost ground on Tuesday after a warning from President Donald Trump to China amid ongoing trade negotiations pressured technology shares, while investors looked to an expected Federal Reserve interest rate cut at the conclusion of its monetary policy meeting.

    The three major U.S. stock indexes concluded the session in the red, pressured by technology and consumer discretionary stocks. As trade talks between the world’s two biggest economies continued in Shanghai on Tuesday, Trump warned China against trying to wait out his first term in office to finalize a deal.

    “Techs are weaker today, as Trump took another shot across the bow to China over trade,” said Joseph Sroka, chief investment officer at NovaPoint in Atlanta. “Big multinational tech companies are very sensitive to trade and tariff issues with China.”

    Market participants are looking to the Fed’s statement at the conclusion of its two-day meeting on Wednesday for clues as to how the central bank will proceed through year-end.

    Many analysts said a 25-basis-point cut in interest rates is fully priced into the market.

    “The message this sends to the market is that the Fed is supportive of economic expansion,” said Sroka. “That they’re cognizant of trade and tariff issues causing some slowdown, and a small cut tomorrow reinforces that rates are more likely to go down than up in the intermediate term, which markets see as a positive signal.”

    China’s official PMI and Aussie CPI data and how could they affect AUD/USD?

    (FXStreet 30/07/2019) - Early on Wednesday, China Federation of Logistic and Purchasing will release July month’s official Purchasing Manager Index (PMI) numbers around 11 am Sydney/01am GMT. The same will be followed by the second quarter (Q2) Consumer Price Index (CPI) from the Australian Bureau of Statistics with a scheduled release on 01:30 GMT. Considering the high importance that both the catalysts carry for the AUD/USD pair, traders will be keenly observant of the outcome for fresh Aussie moves.

    Expectations favor mild improvement in the data with China’s Manufacturing PMI likely inching up from 49.4 to 49.6 while Non-Manufacturing PMI is expected to rise from 54.2 to 54.5. Elsewhere, Australia’s Q2 CPI may increase to 0.5% from 0.0% on a QoQ basis whereas Reserve Bank of Australia’s (RBA) Trimmed Mean CPI could inflate from 0.3% to 0.4% on the quarterly basis.

    TD Securities also follows market consensus while saying: Sentiment among manufacturers likely improved in July but not enough to move back into expansion. We expect the (China Manufacturing) PMI to edge higher to 49.9 in July from 49.4 in June, as the impact of the US-China trade truce filters through. Also despite a weak Q2 GDP outcome, activity indicators picked up momentum in June, which likely carried through into July amid ongoing easy liquidity and phased cuts in the RRR for small and medium-sized companies.

    We look for headline CPI to gain 0.6% q/q in Q2, pushing the y/y rate to 1.6% (mkt: 0.5% q/q and 1.5% y/y). Rising oil prices over the quarter is the main driver, and a pick-up in annual private healthy premiums, rising airfares, and the increase in tobacco excise support upside risks. Our forecast for core inflation at 0.4% q/q and 1.5% y/y is in line with both consensus and the RBA's forecasts, so has limited market implications.

    How could they affect AUD/USD : While recent doubts over the US-China trade deal and RBA’s dovish bias already weighs over the Aussie, any further deterioration in the key statistics wouldn’t be welcomed by the AUD/USD pair buyers. It should also be noted that upbeat prints are also likely not to have a near-term bullish impact on the pair, unless being extremely high, as markets await details from Shanghai trade talks and today’s Fed meeting.

    Technically, June month bottom close to 0.6830 becomes nearby support to watch during the pair’s further declines while a pullback, considering the oversold condition of 14-day relative strength index (RSI), can recall early-month low surrounding 0.6910.

    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.

    USDCAD Daily – Short positions below 1.3220 with targets at 1.3010 & 1.2930.

    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.

    GBPJPY 30 Minute – Buy above 131.57, rebound towards 133.10.

    CRUDE OIL
    30 Minute – Long positions above 57.23 with targets at 58.79 & 59.55.

    USDJPY 30 Minute – Short positions below 108.90 with targets at 108.40 & 108.20.

    SILVER Daily– Long positions above 16.5000 with targets at 16.6200 & 16.6800.

    NIKKEI Daily – Long positions above 20950 with targets at 22350 & 23000.

    DOW JONES Daily – Long positions above 26975 with targets at 27500 & 27920.

    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: July 31, 2019 | 6:56 AM