RISK ASSETS GAIN AS TRUMP THREATENS TO IMPOSE TRADE TARIFFS

TRADE WARS

Financial markets quickly moved to risk-off trading sentiment this week, as United States President Donald Trump imposed trade tariffs for steel and aluminum imports on a selected number of countries. Traders sold the U.S dollar, stocks and riskier assets classes on the news, and quickly moved money into the perceived safety of spot gold and the Japanese yen currency. The U.S trade tariffs are seen by many as a clear message to China, who have been the main beneficiary of steel and aluminum exports over the past decade. The Trump administration also imposed trade tariffs on Europe, provoking threats of counter-retaliation from some European Union politicians.

CRYPTO WARNING

Bitcoin suffered double-digit losses this week, after the U.S Securities and Exchange Commission issued a severe warning to Cryptocurrency investors. The SEC announcement centered around the risks of dealing with unregulated exchanges, triggering a broad-based sell-off in the Bitcoin markets. The BTCUSD pair had suffered repeated technical failure around $11,500 in early week trading, and plunged over ten percent in the hour after the announcement from the SEC. In the broader Cryptocurrency market, Dash, Ripple, Bitcoin Cash and Litecoin suffered from low trading volumes in early week trading, whilst later incurring heavy losses following the SEC's warning to investors.

• The BTCUSD pair remains bearish while trading below the $10,150 level, further losses towards $8,100 and $7,300 seem possible.
• If the BTCUSD pair trades above the $10,150, an upside recovery towards the $10,800 and $11,500 level may occur.

LOONIE DROPS

The Canadian dollar fell to a new 2018 trading low against the U.S dollar this week, as the United States administration threatened to impose trade tariffs on some Canadian imports. The USDCAD pair performed a major upside technical break-out on the news, with price-action breaking above the key 1.2915 level, and promptly heading towards the 1.3000 handle. The Bank of Canada also added to the Canadian dollar's woes, as they kept interest rates on hold, and voiced concerns about the potential impacts of U.S trade tariffs on the broader Canadian economy.

• The USDCAD pair is strongly bullish while trading above the 1.2915 level, further gains towards 1.3050 and 1.3160 remain likely.
• Should the USDCAD pair trade below the 1.2915 level, price-action may correct back towards the 1.2800 and 1.2740 level.

EURO UNCHANGED

The euro currency looked past the uncertain outcome of the Italian election result in early week trading, as investors choose to focus on eurozone growth and Angela Merkel's fourth-term as German Chancellor. The euro also gained ground against a basket of top-tier currencies, as the European Central Bank removed the easing bias from its scheduled policy- statement. The overall more hawkish stance from the ECB failed to support EURUSD buying above the 1.2400 level for long, as ECB President Mario Draghi voiced strong concerns about U.S trade tariffs, sending the EURUSD pair back towards the 1.2300 level.

• The EURUSD pair remains bullish whilst trading above the 1.2278 level, further upside towards the 1.2470 and 1.2555 levels seems possible.
• Should the EURUSD pair trade below the 1.2278 level for a sustained period, a correction towards the 1.2230 and 1.2060 levels seems possible.