HomeContributorsFundamental Analysis2018 In FX, Commodities & Indices

2018 In FX, Commodities & Indices

The last day of 2018 is winding down with more conflicting signals. The latest China PMI showed just how hard tariffs are hitting, while Trump on the weekend hinted at progress in trade talks. Markets started the week relatively flat ahead of last week’s madness. Normally we’d expect extremely quiet trade through New Years but this year-end has been anything but normal. Tomorrow is a holiday almost everywhere, and US data on ISM and jobs will be released on Thursday and Friday respectively. The charts below rank the performance of global indices, FX and commodities.

President Trump teed up an upbeat start to the week after tweeting on Saturday that he had a call with Chinese President Xi and cited ‘big progress made’ on a comprehensive trade deal. Mid-level US officials will travel to China in the week of January 7 with 60 days remaining to broker a deal.

The optimism about a China deal was balanced by worry about Chinese industry after the official manufacturing PMI fell to 49.4 from 50.0. It was expected to remain unchanged. The drop is a fall to the lowest since July 2016. It was tempered by some good news in the services PMI at 53.8 compared to 53.2 expected.

The market is trying to sort out whether the global economy is simply slowing or grinding to a recession. There is concern about US industry as well but on Friday the Chicago PMI posted a reading of 65.4 compared to 60.3. That was in sharp contrast to a plunge in the Richmond Fed.

What will make the outlook going forward tricky is that the US Commerce Dept is shut down along with many other parts of the Federal government. That delayed Friday’s planned releases of trade balance data and wholesale inventories. There’s no sign of an end to the shutdown.

In Europe, Italy passed the 2019 budget after an acrimonious process. That ends this chapter but the seeds have been sewn for future problems.

 

Ashraf Laidi
Ashraf Laidihttp://ashraflaidi.com/
Ashraf Laidi is an independent strategist and trader, founder of Intermarket Strategy Ltd and author of "Currency Trading & Intermarket Analysis". He is the former chief global strategist at City Index / FX Solutions, where he focused on foreign exchange and global macro developments pertaining to central bank policies, sovereign debt and intermarket dynamics. Ashraf had also served as Chief Strategist at CMC Markets, where he headed a global team of analysts and led seminars and trainings in four continents. His insights on currencies and commodities won him several #1 rankings with FXWeek and Reuters. Prior to CMC Markets, Laidi monitored the performance of a multi-FX portfolio at the United Nations, assessed sovereign and project investment risk with Hagler Bailly and the World Bank, and analyzed emerging market bonds at Reuters. Laidi also created the first 24-hour currency web site for traders and researchers alike on the eve of the creation of the euro. Laidi's analysis of currency markets stand out based on his distinct style in bridging the fundamental and technical aspects of the markets. Laidi regularly appears on CNBC TV (US, Europe, Arabia and Asia/Pacific), Bloomberg TV (US, Asia/Pacific, France and Spain), BNN, PBSs Nightly Business Report, and BBC. His insights also appear in the Financial Times, the Wall Street Journal and Barrons. He has given numerous interviews and lectures in Arabic, French, and to audiences spanning from Canada, Central America and Asia/Pacific.

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