DOW opened lower as Trump chose escalation rather than negotiation with China. The Chinese Global Times reported that there was no negotiation taken place. White House economic advisor Larry Kudlow also said negotiations have not really begun yet. So, without starting negotiations, the US has already fired three shots (the 232 steel tariff, 301 tariffs and triple up 301 tariffs). Is there really any intention for talks?
Anyway, DOW drops to as low as 24245.02 initial trading but quickly recovers. It’s not back pressing 24400 handle, down just around -100 pts. Technically, we maintain the firstly, price actions 23360.29 are forming a corrective pattern. Rejection from trend line resistance (now at 24838) will make it a triangle. Break of the trend line will push DOW to 25449.25/25800.35 zone to make it a rectangle. Despite today’s retreat, we’d expect more upside in the near term for at least a take on the trend line.
In the forex markets, European majors are generally strong, led by GBP today. CAD is only up against USD and NZD despite some solid job data. NZD and USD are the weakest ones. In particular, after initial hesitation, traders finally decide to sell USD after the weaker than expected NFP report.