While most blame President Trump, the EU is complicit in the looming trade wars this year. In retaliation, today the European Union has introduced tariffs on US goods imported into the region, media focusing on iconic items like bourbon, jeans, motorcycles and orange juice worth a total €2.8 billion.
An emergency ‘mini-summit’ meeting of EU leaders has been called for this Sunday by Jean-Claude Juncker to discuss migration issues ahead of next week’s council summit. The German Chancellor is under pressure from her coalition interior minister to change her policy on asylum seekers. However, Italy – where interior minister Matteo Salvini, the League party’s leader is becoming a dominant force – has objected strongly to the proposals and is rumoured to have threatened withholding contributions to EU funding.
DAX 30
We’ve had our first daily close below this Spring’s support at 12600 and momentum has become a little more bearish. German automakers say they are willing to drop the 10 per cent tariff on US made autos; this appears too little too late. Daimler yesterday warned that profits will be lower because on US-China trade tensions, dragging down European car-makers’ shares.
SHORT TERM TRADER: Short at 12955; stop well above 13000. Target 12200.
POSITION TAKER: Will re-sell at today’s close if it’s clearly below 12600.
FTSE 100
The first daily close below recent lows has kept momentum fractionally bearish as it has been much of this month.
SHORT TERM TRADER: Added to short at 7550, yesterday’s close; stop above 7800. Target 7400.
POSITION TAKER: Small short at 7799; stop well above 7800. First target 7400, then 7100.
S&P 500
Yesterday’s bearish engulfing/shooting star type candle suggests resistance at 2780 is a little stronger than we had imagined. The MACD has edged into bearish territory again and we look set to test the lower edge of the wedge formation that has dominated since April. A weekly close below here should turn momentum bearish.
SHORT TERM TRADER: Short at 2735; stop above 2800. First target 2680.
POSITION TAKER: Might sell at tonight’s close.
BRITISH POUND/US DOLLAR
Yesterday’s bullish engulfing candle was caused my media-grubby Andy Haldane voting at the Bank of England’s MPC to raise the key interest rate. He voted to raise rates in November, then changed his mind when awful Q1 GDP growth was reported. Watch to see if cable can form a decent weekly reversal candle suggesting an interim base is in place.
SHORT TERM TRADER: New tiny long at 1.3295; stop below 1.3100. Target 1.3740.
POSITION TAKER: Square.
EURO/US DOLLAR
A potential double bottom at 1.1500 as the commodity channel index turns up.
SHORT TERM TRADER: New long at 1.1655; stop below 1.1500. First target 1.1850.
POSITION TAKER: Square.
GOLD
A hammer candle yesterday just below long term trend line support at 1270 suggests that a weekly close below here is unlikely, despite strong bearish momentum.
SHORT TERM TRADER: Square
POSITION TAKER: Short at 1298; stop above 1285. Target 1250.
