Wednesday (April 4) in the US market. The US dollar index fell back under pressure and retreated to below the 90 mark. As the US dollar fell, major non-US currencies and spot gold regained action, with spot gold approaching 1350 more than a week high, but then the gains were slightly reduced. Last night, the US Trade Representative's office released a list of Chinese products for tariff proposal, the list involves aerospace, information and communication technology, robotics 300024, attending stocks and machinery and other industries, contains approximately 1300 independent tariff. This afternoon, the State Council Customs Tariff Commission decided to impose a 25% tariff on 14 categories of 106 items of soybeans, automobiles, and chemicals originating in the United States. The implementation date will be based on the implementation of the tariff imposed by the US government on my goods and will be announced separately.
Beijing time this evening, the US President’s tweet said, “We are not fighting trade with China now. We lost the trade war many years ago and lost in the hands of those stupid and incompetent people who represented the United States at the time. Now we The annual trade deficit is 500 billion U.S. dollars, and it still loses 300 billion U.S. dollars in intellectual property theft every year. We must not let this continue."
US Commerce Secretary Wilbur Ross told CNBC on Wednesday that Sino-US trade issues may eventually be resolved through negotiations; if a trade war is carried out, the United States will not lose.
Ross said that China's response should not surprise anyone. He does not think that the Chinese will "do nothing" because of US tariffs; instead, Wall Street's reaction to trade friction surprised him.
From the technical point of view of the US dollar, the four-hour chart shows that the US dollar index failed to move further after breaking through the short-term consolidation range of 89.85-90.15. It is now re-entering the inside of the range, indicating that the short-term still lacks direction.
At present, the support of the 90th line is still being tested. If the level rebounds, it is expected to break through 90.15 again. The effective break will open up further upwards to the 90.30 and 90.50 levels.
If it falls below 90 effectively, it may fall further. The initial support is at 89.85 at the bottom of the range. The effective break may point to the level of 89.60 or even 89.40.
USD/JPY continued to fall, with the lowest falling below the 106 mark and hitting the low of 105.97. Analysts pointed out that the rising risk aversion and key technical resistance levels are still valid, making the exchange rate risk of recovering from the downside.
The daily chart shows that the exchange rate has once again been blocked by the downward pressure line since February 21, which is also near the horizontal resistance level of 106.70. Therefore, it is impossible to effectively break the pressure line and warn that the exchange rate has the risk of restoring the pressure line down.
The initial support below the short-term line is at 106.00, and may fall to 105.60 and 105.25 levels after the break. If the rebound breaks through 106.70, then it may be stronger to point to the Bollinger Band and the resistance of 107.30. The effective breakthrough will open up more upside.
The Dutch International Group pointed out that the transient reaction of the foreign exchange market to China's tariff increase news confirms the expectation of how the foreign exchange market will perform in the "cold trade" conflict: the yen is the best tool to hedge the risk of trade warfare, with a target of US$100. JPY.
It also pointed out that "it is worth mentioning that the trade war alone will not cause the global economy to decline, nor will risk assets continue to fall."
“Protectionist measures implicitly reflect the US government’s expectation of a depreciation of the dollar – this expectation may take root in the currency market before it is indeed broken!â€
In terms of gold, although the increase to the highest level of 1347.97 US dollars / ounce began to shrink, but still stick to the top of the 1330, technically, it is expected to open a further strength pointing to the 1350 and the pressure line 1355 since January 25, and if Breaking the pressure line may indicate a larger upside.
Analysts pointed out that because China's trade war counter-attack list is more tougher than many expected, risk appetite may deteriorate further, meaning that gold is expected to continue to be boosted.
Are there any retreats between China and the United States?
As far as the performance of China and the United States has been in recent weeks, it seems that there is no intention to express concession. After Trump issued a message in early March that "the trade war is very good for the United States and is determined to win", China also stated in the following days that China will take all necessary means to defend its legitimate rights and interests until the last moment. .
If the current confrontation situation can find hints from the differences in past trade disputes, then it is unlikely to be a easier solution. In theory, the WTO’s responsibilities should be subject to jurisdiction and resolution of such actual trade war escalation, but the officials of the organization are actually aware of the bets on this situation and have published their deeds. A relatively hard statement for a neutral statement.
At the beginning of March, Roberto Azevedo, the Director-General of the WTO, said that after Trump announced the imposition of a heavy import tax plan, the trade war would not benefit the two sides. The WTO will pay close attention to this situation.
But from this statement, it seems that it also shows that the WTO can only pay close attention to this section. In fact, most of the previous trade dispute cases against the WTO were mainly based on the initiative of WTO members themselves to seek solutions. In other words, the WTO is more to provide the two countries with a need to express their respective needs. The platform plays the role of a coordinator of obligations. Member states such as the United States are also joined by the process of signing and accepting compliance with WTO regulations.
In view of Trump's use as an excuse to make the WTO incapable, it seems that the political and economic crisis between China and the United States will be further escalated, and the current confrontation seems to have become a stage of confrontation between the leaders of the two countries. .
Of course, politicians also said that unless the two countries are willing to negotiate a solution, there will be no way out between the two sides and no face to face. In the long run, if the trade war confrontation leads to an increase in economic costs, then there is more room for choice: two, a counterattack that is unlikely to occur; and a sensible negotiation.
Due to the escalating trade dispute between China and the United States, most of the global stock markets have retreated. France's CAC40 index closed down 0.20% on Wednesday, Germany's DAX index closed down 0.34% on Wednesday, while the US stock market also fell back after the opening, the Dow fell more than 160 points in the intraday market.
“I think the market is worried that the situation will worsen now,†said James Paulsen, chief investment strategist at The Leuthold Group. “It’s not a bad thing to introduce some tariffs on some goods, but if it spreads around the world, it will really threaten the global economic recovery. ."
However, Goldman Sachs released a report saying that the stock market is unlikely to enter the uninterrupted decline mode. After the recent sell-off, some market analysts began to doubt whether the stock market valuation has been built.
"If interest rate and inflation expectations do not rise too much, it is difficult to see the trigger of a rapid recession," said Peter OPP enheimer, chief strategy officer at Goldman Sachs Global Stock Market.
Goldman Sachs' long-short ratio indicator is above 70, which is usually a very dangerous level. However, Goldman Sachs explained that this was due to low unemployment and sluggish inflation.
Another indicator that can prove that the stock market will not fall further quickly is the valuation. Oppenheimer pointed out that the free cash yields of major markets are clearly above average performance, strongly supporting the valuation.
In addition, U.S. national economic adviser Kudlow said in a speech that the US trade action has nothing to do with the trade war. When asked if the US will fail in the trade war, he believes that this situation will not develop. It is currently a negotiation and we will use all the tools in the negotiations.
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