Saturday, 21 April 2018

Market Trends (Trade War Texas Hold’Em)

MARKET TRENDS (16th April 18)
Important Economic Announcements for the week:
Mon: US Retail Sales 8.30 pm
Tues: RBA Meeting Minutes 0930 am CNY GDP 10 am GBP Average Earnings 4.30 pm
Wed: GBP CPI 4.30 pm Eur CPI 5 pm BOC Interest Rate Decision 10 pm
Thurs: Aud Unemployment Rate 9.30 am
Fri: CAD Retail Sales 8.30 pm

Short Thoughts
With the to and fro from US and China negotiations and threats on their trade tariffs, it certainly seems like a high stakes poker game. Any chances of an increase or decrease of the stakes would lead to the markets oscillating up and down akin to a roller coaster ride. On the whole, it is still trading in the range of 23000 and 26000 which I have mentioned in my previous write-ups. So we need a break from this range before we have a clearer idea of where this market is heading.
Currently, China export close to 500 billion a year to US whereby US export close to 150 billion a year to China. It seems like US have the upper hand in this high stakes mind game. However, China could tilt the game to their side of the table as they are the largest investor for US Treasuries with a trillion holdings whereby Japan comes in at a close second position. The US currently has a total debt of around 20 trillion dollars. On the other hand, China has a reserve of around 3.2 trillion dollars. Therefore, this game could be quite balanced with two strong hands and no one wants to get hurt badly.
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