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Suspense was in the air today as investors kept a close eye on the latest global trade developments.

Asian stocks dipped to a 14-month low during early trading while European shares were mildly higher following a fresh round of verbal threats between Washington and Beijing. China is seeking permission from the World Trade Organisationto slap sanctions on the United States next week for non-compliance with a ruling regarding U.S. dumping duties. This development comes at a time whenWashington is due to announce a decision on whether to impose tariffs on $200 billion worth of Chinese goods.

Market sentiment may be dealt a serious blow if the Trump administration moves ahead with imposing tariffs on China, especially after Beijing has vowed to retaliate. With a full-scale trade war between the world's two largest economies seen as a significant threat to global growth and stability, there are no winners.

The turmoil sweeping across emerging markets could be here to stay due to a combination of key market themes. Prior to the brutal EM currency selloff, escalating global trade tensions already weighed heavily on emerging markets while a broadly stronger Dollar compounded downside pressures. With mounting expectations of higher U.S. interest rates seen as another nail in the coffin, EM currencies could remain depressed for a prolonged period.

In the currency markets, the Dollar was on standby against a basket of major currencies ahead of the U.S. PPI report scheduled for release this afternoon. Markets expect to see producer prices having slowed in August, with the headline year-on-year rate cooling from 3.3% to 3.2%. With the Dollar heavily supported by rate-hike speculation and safe-haven demand, the outlook remains fundamentally bullish. Technical traders will continue to closely observe how prices behave above the 95.00 level. A breakdown below this level could encourage intra-day bears to target 94.80 in the near term.

Gold's depreciation has been based ona broadly stronger Dollar and prospects of higher US interest rates.

The chaos across emerging markets could impact the metal's trajectory in the coming weeks. It is worth notingthat emerging markets remain the biggest consumers of physical gold, and with their currencies sharply depreciating, their purchasing power decreases. A fall in purchasing power among EM consumers is likely to compound the yellow metal's woes.

Focusing on the technical perspective of gold, intra-day bears need to breach the $1,191 level to open the gates towards $1,180.

Bears are taking a breather above new over 2 ½ year low at 0.7085, but upside attempts were so far limited.

Selling Aussie remains favored as hedge on rising fears about trade war escalation, with upticks seen as positioning ahead of fresh weakness.

Rising momentum, which formed bull-cross and bullish divergence on oversold daily slow stochastic are supportive for further recovery attempts, but extended upticks are expected to be capped by falling 10SMA (0.7168) and former low of 15 Aug at 0.7202.

Only sustained break here would sideline bears and signal stronger correction.

Res: 0.7144, 0.7168, 0.7202, 0.7243
Sup: 0.7085, 0.7022, 0.7000, 0.6954

The GBP/USD is heavily affected by the BREXIT news. Each time some news is released we see a lot of volatility in the cross. Algos react to news very quickly, but shortly after the price tends to correct itself. Try to keep the risk under control as the GBP is very volatile.

Technically, the pair is in uptrend. The POC zone 1.2982-92 could reject the pair to the upside targeting 1.3040 first. Above 1.3040 targets are 1.3064, 1.3098 and 1.3154. However a drop below 1.2960 could lead to a retest of 1.2908 – an important support

W L3 - Weekly Camarilla Pivot (Weekly Interim Support)

W H3 - Weekly Camarilla Pivot (Weekly Interim Resistance)

W H4 - Weekly Camarilla Pivot (Strong Weekly Resistance)

D H4 - Monthly Camarilla Pivot (Very Strong Daily Resistance)

D L3 – Monthly Camarilla Pivot (Daily Support)

D L4 – Monthly H4 Camarilla (Very Strong Daily Support)

POC - Point Of Confluence (The zone where we expect the price to react - aka the entry zone)

The pair is again facing strong headwinds at daily cloud top (111.58), despite Tuesday's strong rally broke and closed above the cloud, as Wednesday's action is so far in red and returned into cloud. Choppy directionless mode within thick daily cloud extends into third straight week, with several unsuccessful attempts at both cloud boundaries. Weakening 14-d momentum which created bear-cross and heads towards negative territory, slows bulls and offsets bullish setup of daily MA's. Dip-buying scenario is expected to remain favored while converged 10/55SMA's (111.20) hold, with bullish scenario requiring repeated close above cloud top to open way for test of next pivotal barrier at 111.87 (Fibo 61.8% of 113.17/109.77 descend). Otherwise, close below cloud top would signal another false break higher, while return below 10/55SMA's would weaken near-term structure and neutralize existing bullish bias.

Res: 111.65, 111.75, 111.87, 112.15
Sup: 111.43, 111.20, 111.03, 110.85

Cable regained traction and returned above 1.30 handle, following previous day's dip to 1.2963.

Positive sentiment on optimistic outlook for Brexit and strong US jobs data, keeps bulls in play for attack at falling cloud base at 1.3104, despite Wednesday's action ended in long-legged Doji, which signals strong indecision.

Strong bullish momentum supports for further advance, as bullish signal was generated on repeated close above falling 55SMA.

However, overbought slow stochastic suggests bulls may take a breather and delay final attack at falling daily cloud (1.3104/1.3162), with cloud top being reinforced by Fibo 61.8% of 1.3472/1.2661 descend.

Broken 55SMA marks initial support at 1.3012, with dips expected to find ground above sideways-moving 10SMA (1.2952) to keep bullish bias.

Thursday's BoE policy meeting would provide fresh direction signals.

Res: 1.3087, 1.3104, 1.3162, 1.3173
Sup: 1.3012, 1.2992, 1.2963, 1.2952

Here are the latest developments in global markets:

FOREX: The US dollar was nearly flat against a basket of six major currencies on Wednesday (-0.03%), after posting some modest losses in the previous session. Meanwhile, the yen retreated notably on Tuesday, as risk appetite remained firm and investors rotated out of safer assets. In Canada, the loonie staged a significant comeback amid encouraging NAFTA signals from the US President and a surge in oil prices.

STOCKS: US markets closed in the green on Tuesday, buoyed by a recovery in the tech sector. The tech-heavy Nasdaq Composite outperformed (+0.61%), propelled higher by gains in giants like Apple (+2.53%), Microsoft (+1.70%), and Google-parent Alphabet (+1.27%). Meanwhile, the S&P 500 (+0.37%) and the Dow Jones (+0.44%) edged higher as well, drawing some strength from gains in energy stocks amid a surge in oil prices. Futures tracking the S&P, Dow, and Nasdaq 100 are pointing to a more or less flat open today. Asia was a different story though, with nearly every major index being in the red on Wednesday. In Japan, the Nikkei 225 (-0.27%) and the Topix (-0.45%) dropped despite a weaker yen, while in Hong Kong, the Hang Seng was down by 0.58%. In Europe, all the major benchmarks besides the Italian FTSE MIB and Spanish IBEX 35 were set to open higher today, futures suggest.

COMMODITIES: Oil prices were higher on Wednesday, extending the significant gains recorded in the previous session. WTI was up by nearly 0.80% at $69.79 per barrel, while Brent gained a modest 0.27% to trade at $79.24 a barrel. The gains came on the back of a larger-than-expected drawdown in the private API inventory data released overnight, though it should be noted that oil prices were also boosted as Hurricane Florence was threatening to cause disruptions in US east coast gasoline markets. In precious metals, gold prices were down by 0.38%, at $1,193 per ounce on Wednesday. The dollar-denominated yellow metal remains in a narrow range between $1,214 and $1,189, showing limited response to anything besides movements in the greenback.

Major movers: Yen extends losses as risk appetite recovers; loonie rebounds

Risk sentiment remained supported on Tuesday, with funds being rotated out of safe-haven assets such as the Japanese yen and US Treasuries, and into riskier ones like US stocks. The yen retreated across the board, while yields on 2-year US Treasuries reached a fresh 10-year high, indicating a notable selloff in US bonds. At the same time, major US stock indices like the S&P 500 and the Nasdaq advanced for a second session in a row, and oil prices also headed sharply higher alongside energy stocks.

In terms of fundamental catalysts, there were multiple. For starters, reports suggest that Commerzbank and Deutsche Bank – two of Germany’s biggest and most troubled lenders – are considering a merger, alleviating some worries around the health of Europe’s financial sector. Then, US data painted a brighter picture for the nation’s booming economy, with JOLTS job openings reaching a fresh all-time high, and small business optimism as gauged by the NFIB survey also rising to the highest on record. Finally, there was no material escalation in trade frictions. Yes, China did announce it will seek WTO sanctions on the US, but that is a negligible development overall. More importantly, the US hasn’t imposed new tariffs yet – something that investors have been on edge about. The adage “no news is good news” describes this situation perfectly.

Elsewhere, positive NAFTA headlines helped the Canadian currency stage a remarkable recovery, with rising oil prices also aiding the move. The US President said that trade talks were “going well”, and that Canada wants to make a deal. The remarks came as Canada’s foreign minister Freeland returned to Washington to restart trade talks. With no major Canadian data releases on the agenda until late next week, NAFTA headlines are likely to remain the dominant force for the loonie. Any remarks suggesting further progress – particularly from US trade representative Lighthizer or Freeland – could spell more good news for the currency as the NAFTA risk premium is phased out.

In Brexit-land, the pound failed to capitalize on stronger-than-expected UK wage growth data, held back by media reports suggesting that UK officials are “misreading” upbeat statements from Brussels, and that the EU will not change its “red lines”. Sterling traded in a very volatile manner to end the day nearly flat against the dollar and euro.

Day ahead: Eurozone industrial production and US PPI due; trade, Brexit and EM closely watched

Wednesday’s calendar features eurozone industrial production figures and US producer price data. Beyond these, Brexit updates, EM angst and perhaps more importantly trade developments will be closely watched.

On the trade front, the US appears to be raising its tariff stakes. In the meantime, China will ask the WTO next week for permission to proceed with sanctions on the US for the country’s non-compliance with a ruling in a dispute over dumping duties. In terms of Canada-US talks aiming to forge a new North American trade deal, sources suggest Canada is ready to make a concession by offering the US limited access to the Canadian dairy market; such a move would bring the parties closer to a deal.

On Brexit, a special summit between the UK and the EU taking place in November could be announced soon.

Meanwhile, anxiety over EM markets remains in the background. Argentina’s central bank held rates at the record high of 60%, with the central bank of Turkey deciding on interest rates tomorrow.

In terms of data, July’s industrial production out of the eurozone will be hitting the markets at 0900 GMT. Monthly figures are forecast to reflect a contraction for the second straight month, with the annual rate of growth in industrial output expected to stand at 1.0%, down from June’s 2.5%. It is of note that German data on industrial output released last week unexpectedly showed a large fall in July.

US producer price data for August are due at 1230 GMT. The relevant index (PPI) is predicted to slightly ease in yearly terms, but grow by 0.2% m/m after exhibiting zero growth in July. The core measure of PPI that excludes volatile food and energy items is expected to expand by 2.7% y/y, the same as in July. The readings come one day ahead of prints on consumer prices out of the world’s largest economy and may be seen as giving an indication on tomorrow’s releases. Also out of the US, the Fed’s Beige Book touching on current economic conditions in each of the 12 Federal districts is due at 1800 GMT.

Capacity utilization figures for Q2 will be released out of Canada at 1230 GMT.

The UK’s Treasury Select Committee will be holding pre-appointment hearings for external members of the Prudential Regulation Committee at the Bank of England at 1315 GMT. Additionally, FOMC policymakers Bullard (non-voting FOMC member in 2018) and Brainard (permanent voter) will be talking on the US economy and monetary policy at 1340 GMT 1445 GMT respectively. Also of interest may be European Commission President Jean-Claude Juncker’s annual State of the Union speech.

In energy markets, EIA data on US crude stocks are due at 1430 GMT. A drawdown by roughly 0.81 million barrels is projected for the week ending September 7, following a fall by around 4.3mn during the previously tracked week.

Lastly, Apple will be unveiling new products, including its latest iPhone models, later today.

Technical Analysis: WTI oil futures positive momentum eases

WTI oil futures (October delivery) surged on Tuesday, adding 3.5%. The Tenkan- and Kijun-sen lines are positively aligned which is an indication of positive momentum in the short-term. However, the two have flatlined which suggests that the bullish bias has eased. The RSI supports this view as it has halted its advance.

A larger-than-anticipated drawdown out of today’s EIA inventory data could boost prices. Resistance to advances may take place around the two-month high of 71.37 from September 4. Further above, early July’s 75.24, the highest since late 2014, would increasingly come within scope.

Conversely, a smaller drawdown or a buildup in crude stocks may weaken prices. The area around 69.71 and 67.89 encapsulates the Ichimoku cloud top and bottom, the Tenkan- and Kijun-sen lines and the 50- and 100-day moving average lines, and may be of significance, providing support to losses. Further below, September 7’s three-week low of 66.84 would be eyed.

Supply disruptions having to do with Hurricane Florence can also affect prices.

Since the beginning of this week, the main currency pairs have demonstrated a variety of trends. Yesterday, the dollar index (#DX) closed the trading session with a slight decrease (-0.06%). At the moment, financial market participants have taken a wait-and-see position before the meetings of the Bank of England and the ECB. We recommend monitoring current information regarding the trade conflict between the US and China, as well as negotiations on NAFTA and Brexit.

The Office for National Statistics published a rather optimistic report on the labor market. In August, the number of jobless claims counted to 8.7K. Market expectations were at the level of 10.0K. The unemployment rate remained unchanged at 4.0%. The growth of average wages, taking into account bonuses, accelerated from 2.4% to 2.6%. At the same time, the GBP/USD currency pair closed the trading session in the negative zone. Investors expect comments by the Bank of England representatives on further monetary policy. The meeting of the Central Bank will be held this Thursday, September 13.

The "black gold" prices have been growing. At the moment, futures for the WTI crude oil are testing a mark of $69.75 per barrel. We recommend paying attention to data on the US crude oil inventories at 17:30 (GMT+3:00).

Market Indicators

Yesterday, the major US stock indices closed in the positive zone: #SPY (+0.33%), #DIA (+0.42%), #QQQ (+0.77%).

The 10-year US government bonds yield shows positive dynamics. At the moment, the indicator is at the level of 2.97-2.98%.

The news feed on 12.09.2018:

At 15:30 (GMT+3:00) the producer price index will be published in the US.

Stocks of the Emerging Markets remain under pressure on Wednesday morning, with positive sentiments prevailing in American markets following strong macroeconomic statistics. MSCI for Asia-Pacific region has been updating its lows since July 2017, losing 0.5% on Wednesday. Hong Kong’s Hang Seng loses 0.2% but is also in the area of 14-month lows. Both of these indices have entered the oversold zone on RSI, which reflects a strong impulse for the decline, but also requires attention to a possible rebound.

However, bears seem to have an upper hand for now on EM against a verbal skirmish between China and the United States regarding the trade. Trump noted that he had a tough stance against China, and Beijing told it would request WTO for sanctions of $7 bln. per year against the U.S. due to non-compliance with the trade negotiation procedure.

On the contrast, the U.S. markets were gaining on Tuesday, relying on strong statistics. S&P500 added 0.3%, having recovered after the data from earlier intraday decline. The Small business optimism index has reached a new high in its 45-year history following the most intensive plans to increase jobs, expand investments and increase stocks.

Separately, according to JOLTS report, the number of open positions in July reached a record of 6.94 million, which is greater than the number of unemployed ones that are 6.2 million, also it is noted that the number of those who voluntarily change their work grows. These are the signs of labour market strength, foretelling acceleration of the salary growth that we saw at the end of the last week in Payrolls report on August.

The enthusiasm around the confident growth of the U.S. economy creates expectations of higher rates from the Fed. The markets put 80% chance of the rate rising in September and December versus 71% a week earlier and 60% a month ago. However, this seems to be insufficient for the growth of the dollar. The EM currencies put on pause their decline on the assumptions that strong statistics in the United States will support global growth rates.

The dollar index has been around the 95.0 level since the beginning of the month. EURUSD has retreated this morning to 1.1580 after a failed 1.16 test yesterday, GBPUSD has returned under 1.30.

Strong U.S. data and the news that Hurricane Florence could become the strongest in history, hurting oil production in the U.S., caused a spike in oil quotes. Brent rose to $79, the level, above which oil has not been sustained since May.

The Euro stands at the back foot in early Wednesday's trading, but remains within choppy consolidation between 30SMA (1.1557) and 55SMA (1.1612). Tuesday's long-legged Doji candle confirms near-term scenario, with focus on Thursday's ECB policy meeting which could produce fresh direction signal. Upside potential exists and is supported by rising bullish momentum, with 30SMA required to hold. Break above 55SMA would generate initial bullish signal, with break and close above thin daily cloud (spanned between 1.1649 and 1.1678 and is turning lower on Thursday) and falling 100SMA (1.1685), is needed to open way for attack at key barriers at 1.1733/50 (28 Aug high / late Aug lower platform). Alternatively, bearish signal could be expected on close below 30SMA, which would unmask 1.1526 (10Sep low) and open way for further retracement of 1.1300/1.1733 ascend.

Res: 1.1612, 1.1644, 1.1659, 1.1685
Sup: 1.1570, 1.1557, 1.1526, 1.1466

The USDCAD pair holds in narrow consolidation in early Wednesday's trading, following strong bearish acceleration in late Tuesday after Canada said was ready to make a concession to the US and continue talks about new NAFTA agreement. The pair was down 0.75% for the day, in the biggest one-day fall since 25 July and hit one-week low at 1.3042, where rising 100SMA contained fall. Bearish signal was generated on break and close below thin daily cloud and return below bear-channel upper trendline. Weakening momentum on daily chart keeps the downside vulnerable, however, daily MA's in mixed setup and flat RSI provide no clear direction signal. Near-term outlook is expected to remain negative while the price stays below daily cloud (spanned between 1.3077 and 1.3102), reinforced by falling 55SMA (1.3093). Break below 100SMA would open way towards next pivotal supports at 1.3016 (Fibo 61.8% of 1.2887/1.3226 ascend) and psychological 1.30 support. Conversely, close above 55SMA / daily cloud would ease bearish pressure and signal higher low.

Res: 1.3077, 1.3102, 1.3146, 1.3174
Sup: 1.3039, 1.3016, 1.3000, 1.2962