Markets ended the session a little on the soft side as the tensions between the US and China continue to reemerge.
Some of the measures outlined in the trade agreement appear to be coming into question and this was coupled with the news that China is looking to pass a bill that will impose controls on Hong Kong. News that will likely not go down well locally and has the possibility of reigniting the riots that we’ve seen in the past. On top of that the US has promised to respond accordingly, so tne
At the same time, we saw more negative news by way of US employment claims as the number of new and continuing claims both jumped above predictions.
Most of the action in forex markets were relatively subdued, with a number of the majors failing to break out above some key levels.
We’ve got a busy session in Europe for a second day with the release of the ECB minutes being the highlight.
That said, we haven’t really had any central banks minutes released recently that have added much that we didn’t know already. So while EUR/USD will be watching this one closely, the ECB has so far been relatively transparent in what they are trying to achieve.
Out of the UK, we get another top-tier data release in the form of retail sales. This number won’t be pretty and economists are predicting it to show a big fall of -16.0%. So the GBP/USD could be soft today, which is on the back of news this week that the BOE is considering negative interest rates.
We then turn our attention to the USD/CAD as Canada releases their own retail sales figures which is also expected to be down -10.0%. However, the Canadian release is for the March data as opposed to April in the UK, so that’s important to consider.
The FX Leaders Team hit 2 winners from 3 trades yesterday, as volatility continues to ease to some degree.
Make sure you follow our live signals as we look for some good spots on Friday.
The GBP/USD is soft this week on the speculation that rates could go negative. It looks like price wants to break lower through this support level but as yet, it hasn’t been able to gain any momentum. That said, we are short looking for a break.
The GOLD trade continues to be interesting with price sticking to a few key levels. In my mind, we are still looking for long opportunities here as price is bullish, despite the recent pullback.
Despite the positive headlines we’ve been seeing in BTC lately, the fact remains it cannot break through the $10,000 level. And what’s more important is that it is the big players that keep selling at this price point.
To me, that would indicate price is really going to struggle to get above that level in any meaningful way as the big money players are trying to liquidate their positions.
This can obviously change, but for now, buyers are not getting traction at higher prices, which is bearish.
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Alibaba Group (9988.HK): Potential Downturn Signals
On Wednesday, the U.S. Senate passed a legislation that require companies to certify that they are not under the control of a foreign government and would be banned from the U.S. exchanges if they fail to do so. Yesterday, House Speaker Nancy Pelosi said the House will review the bill. Alibaba Group (9988.HK), a Chinese tech giant dual-listed on NYSE and HKEX, would be vulnerable to such legislation.
To make things worse, the Hong Kong Hang Seng Index is down by more than 3% during early Asian trading hours today, amid hostile political environment in the city. Chinese Premier Li Keqiang said China “will establish sound legal systems and enforcement mechanisms for safeguarding national security in the two special administrative regions (Hong Kong and Macau)”, a move that has been seen as curtailing protests and democratic movements in Hong Kong. Earlier, U.S. President Donald Trump warned that he “will address that issue very strongly”.
From a technical point of view, Alibaba Group (9988.HK) has shown potential downturn signals on the daily chart. It has possibly formed a double-top pattern, while a bearish evening star candlestick was seen on Wednesday. In addition, it has quickly returned to levels below a declining trend line, probably suggesting a false breakout. The level at $212.0 might be considered as the nearest resistance, with prices likely to test the 1st and 2nd support at $187.0 and $178.0 respectively. Alternatively, a break above $212.0 would open a path to the next resistance at $219.0.
Source: TradingView, Gain Capital
Author: George Lam