TRUMP SEEKS TO REJOIN NAFTA AS CHINA’S TRADE DEFICIT WIDENS

Global stocks were higher today fueled by reduced trade rhetoric, the openness of the Trump administration to rejoin the Trans Pacific Partnership (TPP), the reduction of tensions between the US and Russia, and the start of the earnings season. The DAX, FTSE, and CAC were higher by 90, 10 and 20 points respectively. In the US, JP Morgan, Citi, and Wells Fargo announced quarterly reports that beat analysts’ forecasts. JP Morgan announced an EPS of $2.37 against the expected $2.28 while Citi and Wells Fargo announced EPS of $1.68 and $1.12 versus the expected $1.61 and $1.06 respectively.

Earlier today, China announced monthly data on trade that disappointed. The country’s imports grew by 14.4% against the expected 10.03% while exports slid by 2.7% against the expected 10% growth. As a result, the country’s trade balance declined to negative $4.8 billion. Analysts were expecting a surplus of $27.7 billion. This decline can be attributed to the extended new year’s holiday.

Yesterday, the US Labor department released the initial and continuing jobless claims numbers that missed analysts forecasts. The department data showed that 233k people made their initial jobless claims in the past week against the expected 231K. The continuing jobless claims number was 1,871K versus the expected 1,848K. These numbers came a week after the department released data that showed some weakness in the labor market. Still, Fed officials are optimistic of the tightening labor market as shown in the minutes released on Wednesday.

The cryptocurrencies continued the upward momentum today with bitcoin and ethereum rising to more than $8,000 and $500 respectively. The rise came as traders anticipated a more bullish run after the tax season in the US ends.

EUR/USD

The EUR/USD pair is little moved today partly because of the lack of major economic data. Other than two speeches by Fed officials, the market is not expecting any economic data today. In addition, traders are still interpreting the Fed’s desire to change future statements from being accommodative to being neutral or restrained. The pair is currently trading at 1.2320, which is little changed from yesterday’s close.

GER30

Germany’s stocks rose by almost a percentage point. The rise was attributed to Angela Merkel’s response about Syrian strikes where she advocated for non-military responses from the West. The top gainers were BMW, Daimler, and VW which gained by more than a percentage point. The index is now trading at 12,512 euros, up from a low of 12,1245 euros on Monday. The index could continue the upward trend during the US earnings season and if global tensions fall. However, traders should watch out for a short-term correction as bulls take profits.

XAU/USD

Gold has fallen from a high of $1,365 to a current low of $1,332 after global tensions eased and the dollar strengthened slightly. This week, the tensions on trade eased while the geopolitical tensions between the US and Russia have also gone down. Yesterday, the president sent a tweet watering down his earlier tweet aimed at Russia’s president, Vladmir Putin. In the coming days, gold will be the asset to watch as the earnings season gets into full gear and as Trump deals with the emerging geopolitical issues.