Daily Analysis: Stocks Recover again as Trump Eases on Tariffs

Wednesday Market Recap

Asset Current Value Daily Change
S&P 500 2724 0.10%
DAX 12,245 1.09%
WTI Crude Oil 61.30 -1.44%
GOLD 1326.00 -0.21%
Bitcoin 9,740 -9.63%
EUR/USD 1.2402 0.01%

Following yesterday’s after-hour shocker, and the subsequent drift higher, US markets behaved as we expected, trading in a hectic fashion with no clear direction. Despite the lack of real momentum, bulls could claim another small victory, as the major Wall Street indices ended the session near their intraday highs, although the S&P 500 and the Dow are still well off the bounce highs set early last week.

Nasdaq Futures, 4-Hour Chart Analysis

The Nasdaq continued to pull its weight, and with European stocks and US small caps also showing relative strength once again today, we still expect choppy trading to continue until Friday’s Jobs Report, even as technicals still favor a re-test of the February lows.

Russell 2000 (Small Cap Index, 4-Hour Chart Analysis

Today’s recovery was boosted by the late-day news regarding a possible exemption to Mexico and Canada from the recently announced trade tariffs, even as tax and tariff ideas continued to pop up globally amid the intensifying trade war chatter.

Canadian Dollar Dominates Forex Markets

USD/CAD, 5-Min Chart

The Canadian Dollar had a very active session following the Bank of Canada’s rate decision and statement, as we expected, and the tariff-exemption rumors gave another twist to the Loonie’s already hectic day before the bell.

First, the currency sold off, as the central bank’s officials voiced their concerns regarding trade, while leaving the benchmark rate unchanged at 1.5%, in line with the consensus estimate. The USD/CAD pair almost hit 1.30 amid the CAD dip, but the favorable news about the tariffs pushed the pair to its intraday low below 1.29, as stocks rallied towards the end of the session.

EUR/USD, 4-Hour Chart Analysis

The US Dollar was stable in the second half of the session against its most important peers, with the EUR/USD pair hovering around the 1.24 level, while the USD/JPY pair settling down near 106. With Treasury yields remaining near their recent highs, the Greenback might be ready to bounce back against the Euro, as the re-test of the previous rising trendline is now completed, and the MACD indicator is close to giving a sell signal.

Commodities had a dominantly bearish session despite the stable Dollar, as gold drifted lower throughout the day thanks to the improving global sentiment, while oil sold off after an encouraging start following the release of the mixed US crude inventories report, and industrial metals also finished lower.

Cryptocurrencies

BTC/USD, 4-Hour Chart Analysis

The segment took a heavy beating today, especially in the second half of the day, as the majors shed 10% on average thanks to the Binance hack rumors, and another report regarding the SEC’s crackdown on the cryptos. The plunge came on the heels of a two-day sell-off that had been relatively mild in the case of most of the coins, but now, as volatility and correlations jumped, things might get heated up, with several coins approaching crucial support zones.

BTC has been trading around $10,000 following the initial move $9450, and now it is back below the key level after-hours, with all eyes still on the line-in-the-sand support zone between $9000 and $9200 that could be tested in the coming days, as the short-term picture remains bearish, while the recovery is still likely to resume after the correction.

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Author:
Trader and financial analyst, with 10 years of experience in the field. An expert in technical analysis and risk management, but also an avid practitioner of value investment and passive strategies, with a passion towards anything that is connected to the market.