Investors took cover in the greenback after Bloomberg reported that Washington is preparing to announce tariffs on all remaining Chinese imports by early December if talks next month between U.S. President Donald Trump and Chinese President Xi Jinping fail to ease the trade war.
Trump and his Chinese counterpart are due to meet on the sidelines of the Group of 20 leaders summit in Argentina at the end of November.
The Chinese yuan currency, was hovering at 10-year lows in onshore trade, giving up 0.1 percent to 6.9696 per dollar, stirring speculation over whether the central bank will tolerate a slide beyond the key level of 7 per dollar.
The dollar index, a gauge of the currency’s strength against six major peers, traded at 96.66, up 0.1 percent on Tuesday. It hit a 2018 high of 96.86 on Aug. 15.
Elsewhere, the euro. remained under the gun due to continued political uncertainty. The single currency managed to hold steady against the dollar at $1.1377, having hit a 10-week low of $1.1332 on Monday on news that German Chancellor Angela Merkel would not seek re-election as head of her Christian Democrats (CDU) party.
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The Elliott wave forecast for EURUSD suggests that the current bear trend from September is temporary and a bullish wave may begin soon. Below we inspect three different Elliott Wave counts and their characteristics.
· BULLISH EURUSD IN WAVE C OF AN ELLIOTT WAVE FLAT
An Elliott wave flat pattern is a 3-wave pattern labeled a-b-c. I believe we are towards the end of the ‘b’ wave and the bullish ‘c’ wave may begin soon. We know from our Elliott wave studies that the ‘b’ wave of a flat pattern will subdivide as a three wave move or complex correction. ‘B’ waves are typically 80-138% the length of the ‘a’ wave so this current correction lower can drift to 1.1113 and still be within the context of the flat pattern.
· In an interview with Fox News, the US President Trump said that he predicts a "great deal" with China on trade, a Twitter source reports.
· Japanese Prime Minister Shinzo Abe said on Tuesday specific monetary policy steps must be left for the central bank to decide.
“I would like to lay the groundwork for beating deflation in the next three years,” Abe told parliament.
· China’s central bank set its official yuan midpoint to the lowest level in over a decade on Tuesday, as the local currency remained on the back foot on worries over slower growth at home and talk of further falls in coming months.
The official yuan midpoint CNY=PBOC was fixed at 6.9574 per dollar on Tuesday, 197 pips, or 0.28 percent, weaker than the previous fix of 6.9377.
· Japan’s jobless rate fell in September, while the availability of jobs improved to the highest level since January 1974, government data showed on Tuesday.
The seasonally adjusted unemployment rate fell to 2.3 percent from 2.4 percent in August, and compared with economists’ median forecast for the rate to remain unchanged, figures from the Internal Affairs ministry showed.
The jobs-to-applicants ratio rose to 1.64 from 1.63 in August. The median forecast was for the ratio to remain unchanged.
· Brent oil prices dipped on Tuesday, weighed down by ongoing weakness in global stock markets and by signs of rising global supply despite looming sanctions on Iran’s crude exports.
Front-month Brent crude oil futures were at $77.18 a barrel at 0518 GMT, down 16 cents, or 0.2 percent, from their last close.
U.S. West Texas Intermediate (WTI) crude futures were firmer, however, at $67.19 a barrel, up 15 cents from their last settlement, bringing down the spread between the two main oil price benchmarks to below $10 per barrel.
· Crude Oil WTI Technical Analysis: Black Gold trading near October lows as bears keep WTI below $67.00 a barrel
Crude oil is trading in a bear trend below the 200-period simple moving average on the 4-hour chart.
Crude oil is consolidating the recent October fall in a bear flag just below the 50-period simple moving average. The RSI indicator is below the 50 line while the MACD is crossing over and the Stochastic is about to drop below the 50 line.
The path of least resistance is to the downside with bear targets at 65.69 August 13 low and 64.40 August low.
Main Trend: Bearish
Resistance : 67.92, 69.00, 70.00
Support : 66.84, 65.69, 64.40
Reference: Reuters, CNBC, DailyFX
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