Pre-Market: Buy-The-Dippers Burning as Trump, Kuroda Weigh
Equities are plunging again today in European trading as the Yen continues to dominate forex markets with the Dollar retreating for the second day in a row against its two largest peers. The turnaround in the Greenback and the acceleration in the decline of the major indices were fueled by Trump’s plan regarding the steel and aluminum tariffs, and another round of selling started when Bank of Japan President Kuroda shocked the market today.
DAX Index, 4-Hour Chart Analysis
The central banker hinted on the end to the BOJ’s Quantitative Easing program (a temporary end that is, in our humble opinion), sending the Yen soaring to a new 18-month high against the Dollar, while pushing the Nikkei and the DAX near their correction lows in the process.
USD/JPY, 4-Hour Chart Analysis
US equity futures are still faring much better, even as Trump noted that “Trade wars are good and easy to win…”. Well, no Mr. President; trade wars are bad, with usually no winners on the long run, but hey, it sure seems like a good idea at first.
While the tariffs are not the primary cause of the decline, and we have remained suspicious of the post-crash bounce all the way, it’s definitely a huge risk going forward, eerily reminiscent to the start of the disastrous protectionist trade wars of the post-1929 period.
DOW Futures, 4-Hour Chart Analysis
With only the revised UOM consumer confidence coming out in the US, we expect technical trading, with increased volatility, and a dangerous environment for rookie day traders (and a great one for experienced players), given the high likelihood of intraday short squeezes and violent selloffs along the way.
Gold Gathering Strength as Oil Drifting Lower
Gold, 4-Hour Chart Analysis
If trade wars are really coming, gold won’t only benefit in the short-term as it did so far today, but it could be one of the best-performing assets in the coming years, with a lot of sings already pointing into that direction.
Just remember that in 1933 Uncle Sam actually confiscated (stole) the precious metal from private owners. That’s an interesting thing to keep in mind for both gold and Bitcoin owners for the coming years.
Oil and the industrial commodity complex remains under pressure despite the weak Dollar, and commodity-related currencies also continue to bleed before the end of this fascinating week.
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