MANUFACTURING OUTLOOK IN US AND JAPAN FALL AMIDST TRADE FEARS
United States futures are trading down today following reports that the Chinese government was imposing tariffs on 128 American-made products. These products range from meat to pork. This was seen as an indication that the trade war between the United States and China was escalating. At the same time, the United States will release its list of hundreds of products it will place taxes on. The NASDAQ is currently trading at $6555 while the Dow Jones Industrial Average is trading at $24,100.
The Japanese Yen was lower than the major currencies following disappointing data. Yesterday, the country released the manufacturing and non-manufacturing outlook data that missed consensus estimates for the first time in two years. The data showed that the manufacturing outlook declined to 23, missing the consensus outlook while the non-manufacturing index declined to 22.
Data from the United States showed that the manufacturing sentiment weakened in March. Data from ISM showed that the manufacturing PMI was at 59.3 compared to the estimated 60.3. The data was a reflection of the manufacturing industry’s concerns about the tariffs Trump imposed on China and on steel and aluminum. If these tariffs go into place, the manufacturing industry will be the most affected because they will be forced to spend more on inputs.
NASDAQ continued its drop falling to a low of $6404 following the trade war concerns. Traders were also cautious because of the increased scrutiny in the technology sector. The Average Directional Index (ADX) is currently at 31, an indication that the downward trend might continue. At the same time, the RSI is currently at 38. This index could continue the downward trend until the RSI falls below 30.
The EUR/USD pair fell after data from the Bureau of Labor Statistics showed that manufacturing outlook weakened last month. The data showed that the outlook slowed to 59.3, down from the expected 60. The pair is now trading at 1.2322, down from the intraday high of 1.2344. It is now trading at the 38.2 Fibonacci Retracement level. Next, traders should watch out for the 1.2375 level which is the 50% Fibonacci Retracement level.
Today, the pair was little moved following the release of weak data from Japan. The pair traded within a narrow range as traders waited for the ISM manufacturing data from the United States. In the past week, the pair fell to a low of 104.26 and climbed to a high of 107.4. Traders should now watch out for the 105.834 level which forms an important support.