Investors Are Focused on the Escalation in the US-China Trade Conflict

On Friday, the US dollar weakened against a basket of major currencies due to mixed economic statistics. Thus, the number of people employed in the nonfarm sector increased by 263K in April, while investors expected growth by only 181K. Also, the unemployment rate fell to its lowest level within 49 years3.6%. However, experts were upset that the average hourly earnings rose by 0.2% in April instead of the expected increase by 0.3%. ISM nonmanufacturing PMI counted to 55.5 in April, while experts forecasted 57.2. The dollar index (#DX) closed in the negative zone (0.40%).

The US currency is under pressure due to the news that US President Donald Trump decided to sharply increase the pressure on China on Sunday. The President said he would raise US tariffs from 10% to 25% for Chinese goods $200 billion worth this week. It worsened relations between the United States and China seriously and dramatically. Beijing considers cancellation of trade talks this week in Washington because of Trump’s comments, which caught Chinese officials flatfooted.

Jeremy Corbyn, the leader of the British Labour Party, said on Friday that parliament should “negotiate” and break the impasse over Brexit. These comments have supported the British pound.

The “black gold” prices fell by more than 2% due to Donald Trump’s claims. At the moment, futures for the WTI crude oil are testing the mark of $60.60 per barrel.

Market Indicators

On Friday, the bullish sentiment was observed in the US stock market: #SPY (+0.98%), #DIA (+0.80%), #QQQ (+1.59%).

The 10year US government bonds yield fell. Currently, the indicator is at the level of 2.512.52%.

At 11:00 (GMT+3:00) we expect important statistics on economic activity in the Eurozone.

We also recommend following uptodate information regarding trade negotiations between the US and China, as well as paying attention to the speech by the Governor of the Bank of Canada, Poloz.

by JustMarkets, 2019.05.06