Trade war escalates as America imposes new trade tariffs on China
Risk-off trading sentiment returned to financial markets this week after US President Donald Trump threatened China with additional trade tariffs. President Trump issued a message on Twitter, stating that the United States is preparing to place fresh trade tariffs on Chinese goods entering into the American economy. US negotiators reported that China has backtracked on a number of key promises, including reducing intellectual property theft and currency manipulation. China equity markets suffered the greatest losses on the week as traders moved into safe-haven asset classes, such as the Japanese yen currency.
∙ The USDJPY pair is bearish while trading below the 110.00 level, key support is found at the 109.24 and 108.40 levels.
∙ If the USDJPY pair trades above the 110.30 level, buyers may test towards the 110.60 and 111.10 resistance levels.
RBNZ rate cut
The New Zealand dollar came under heavy downside pressure this week after the Reserve Bank of New Zealand cut interest rates by 25 basis points. The RBNZ reduced interest rates to a record low 1.25 percent, as the central bank decided to act to combat weak inflation inside the New Zealand economy. RBNZ Governor Adrian Orr said that a rate cut was needed as the domestic and global economic outlook had worsened, while inflation had persistently missed the RBNZ two percent annual inflation goal.
∙ The NZDUSD pair is bearish while trading below the 0.6600 level, key support is found at the 0.6540 and 0.6480 levels.
∙ If the NZDUSD pair trades above the 0.6600 level, key resistance is found at the 0.6640 and 0.6685 levels.
RBA on hold
The Reserve Bank of Australia kept interest rates on hold this week, although the RBA policy statement warned of an impending rate cut. The RBA was widely tipped to cut interest rates by 25 basis points this week after inflation figures from the first quarter of this year missed expectations. The RBA policy statement hinted that a rate cut would soon be warranted if the Australian unemployment rate continued to track higher. The Australian Dollar spiked higher against the greenback after the rate decision but later slipped on the foreign exchange market over fears about ongoing Sino-US trade tensions.
∙ The AUDUSD pair is only bullish while trading above the 0.7080 level, key resistance is found at the 0.7130 and 0.7180 levels.
∙ If the AUDUSD pair trades below the 0.7080 level, sellers may test towards the 0.6980 and 0.6880 support levels.
Bitcoin above $6,000
Bitcoin moved above the $6,000 resistance level this week, with the number one cryptocurrency trading at its highest level since November 2018. Bitcoin continued to enjoy a strong bid-tone due to bullish news about the plans from social media giant Facebook to adopt Bitcoin for its users. Ethereum and Litecoin once again failed to trade higher as Bitcoin’s market dominance improved above fifty-six percent of the entire cryptocurrency market capitalization.
∙ The BTCUSD pair is bullish while trading above the $5,800 level, key resistance is found at the $6,400 and $7,000 levels.
∙ The BTCUSD pair is only bearish while trading below the $5,800 level, key support is located at the $5,620 and $5,440 levels.