The ongoing trade war is primarily centered on the United States and China, and its repercussions are being felt across global financial markets. China has shown no signs of backing down in this trade conflict. In a recent development, the Chinese government increased import tariffs on products from the U.S. to 125%, up from the previous 84%.
This decision comes on the heels of the U.S. raising tariffs on Chinese imports to a staggering 145%, while delaying any increases on imports from other countries.
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These developments are expected to influence trading activities tonight, along with the release of the U.S. Producer Price Index (PPI) data at 7:30 PM WIB. Here’s what Trading Central has to share:
- U.S. PPI (March/year-on-year); forecast 3.3% vs prior 3.2%.
- Core PPI (March/year-on-year); forecast 3.5% vs prior 3.4%.
GOLD
The price of Gold (XAUUSD) has surged and reached an all-time high of $3,267.68 per troy ounce. Compared to Thursday’s close, Gold has increased by over $62 or 620 pips.
As the trade war intensifies between the U.S. and China, the demand for Gold as a safe haven asset has risen considerably. The two countries had previously entered a trade dispute from 2018 to 2019, which caused a slowdown in the global economy. During that period, Gold prices soared, recording a growth of 22% from 2018 to early 2020.
The prevailing sentiment will continue to affect Gold’s movement in tonight’s trading. Additionally, should the U.S. PPI data come in lower than the forecast, Gold could receive an extra boost in positive sentiment.
OIL
Oil prices (CLS10) have experienced volatility, fluctuating between $59.41 and $61.08 per barrel as European market trading commenced. Nevertheless, with the escalating trade war, Oil might receive negative sentiment going into tonight’s trading session.
EURUSD
The EURUSD pair’s gains were curtailed after peaking at 1.14736 during the early European trading session. This level marked the highest point since February 2022.
The U.S. dollar is facing significant pressure due to the trade conflict, coupled with predictions that the Fed may cut interest rates three times this year. If the PPI data is released lower than the forecast, expectations for more aggressive rate cuts will strengthen, positively impacting EURUSD.
GBPUSD
GBPUSD surged to 1.31447 in early European trading, buoyed by the weaker U.S. dollar and encouraging data from the UK. The Gross Domestic Product (GDP) for February showed a growth of 0.5% month-on-month (MoM), exceeding the Trading Central forecast of 0.1% MoM and the previous month’s growth of 0% MoM.
Additionally, the UK’s industrial production data for February grew by 1.5% MoM, also surpassing the forecast of 0.3% MoM. This data provided an additional positive sentiment for GBPUSD.
USDJPY
Today, USDJPY plummeted by 2.343 points (234.2 pips) to 142.062, marking its lowest level since September 30. The risk of an economic slowdown in the U.S., alongside the Fed’s anticipated aggressive interest rate cuts this year, is placing significant pressure on USDJPY.
Consequently, if the U.S. PPI data is lower than the forecast, the pressure on USDJPY will intensify.
Nasdaq
The Nasdaq index made a rebound at the beginning of the European session after hitting a low of 18,070 earlier in the morning. While the index managed to recover, the ongoing trade war makes it susceptible to reversing direction in tonight’s trading.
