U.S. President Donald Trump announced on Monday that the U.S. will put 10% tariffs on $200 billion in Chinese goods, which will go up to 25% at the end of the year.
Trump added that “if China takes retaliatory action against our farmers or other industries, we will immediately pursue phase three, which is tariffs on approximately $267 billion of additional imports.” “We have been very clear about the type of changes that need to be made, and we have given China every opportunity to treat us more fairly,” he said in the statement. “But, so far, China has been unwilling to change its practices.”
China said on Tuesday that it had no choice but to retaliate against new U.S. trade tariffs, raising the risk that U.S. President Donald Trump could soon impose duties on virtually all of the Chinese goods that America buys. The Chinese commerce ministry’s statement came hours after Trump said he was imposing 10 percent tariffs on about $200 billion worth of imports from China, and threatened duties on about $267 billion more if China retaliated against the U.S. action.
The brief statement gave no details on China’s plans, but Foreign Ministry spokesman Geng Shuang told a news briefing later that the U.S. steps have brought “new uncertainty” to talks between the two countries. “China has always emphasized that the only correct way to resolve the China-U.S. trade issue is via talks and consultations held on an equal, sincere and mutually respectful basis. But at this time, everything the United States does not give the impression of sincerity or goodwill,” he added. Geng said he would not comment on “hypotheticals” such as what measures Beijing might consider apart from tariffs on U.S. products, saying only that details would be released at the appropriate time.
The Aussie rise in today’s session was caused by the upbeat approach used by the RBA in the Minutes published earlier today, i.e., while there was no strong case for near-term adjustment in policy, the next move in the lending rate is more likely to be an increase. Furthermore, despite of persistent risks related to abroad uncertainty and the slow recovery in labor wages, the bank explicitly vowed for a stronger AUD as supportive of domestic growth. However, upward momentum is likely to be temporary due to another key economic indicator, the CPI, which print was also released at -0.6% v.-0.7% and 2.0% prior; which lessens pressure on the RBA to push for a faster monetary policy normalization.
Last week, price continued its ranging move between support at 66.2-64.15 and resistance at 74.45-72.45. After having breached the ascending trend, price turned back to the support zone with a bounce from an ascending trend as shown on the daily chart below. Price is now “pin bar” retesting this zone, as we expect bullish momentum to build up towards the 72.45-74.45 level.
On the daily chart, the price has broken the key resistance level at 2875.58 and stayed above it to reinforce the bullish bias.
However, we should highlight significant reversal signs, including:
1. Elliot’s Wave 5 has formed;
2. AB=CD harmonic pattern in play.
3. A Wedge reversal pattern remains active.
4. RSI Divergence.
Thus, if price breaks through support at 2875.58 we should witness a correction towards 2797.82.
On the daily chart, the Aussie is clearly reflecting a bearish bias as it descends down a channel that started forming since the beginning of this year; reaching support at 0.71 where some clear sign of reversal showed up.
We expect reversal/consolidation to develop further as:
1. Price has bounced from the support zone between 0.71-0.716.
2. An AB=CD harmonic pattern is rather suggestive.
3. A Wedge reversal pattern.
4. RSI divergence.
Consequently, if the price manages to stay above 0.7225, it has the potential of reaching 0.733 and 0.745.
On the daily chart, we observe the Loonie to follow a descending channel since June this year, with a false 2 weeks reversal before continuing its way down.
We expect price to fall further to 1.289 and meet the ascending trend line from March’s Low, coupled with the 200 Exponential Moving Average (EMA)
On the 4H chart, price is moving in a broadening wedge while breaking through the continuous Rectangle pattern at 0.9652. A correction may occur at this level again before digging down to the next support 0.956
On the daily chart, price is moving upwards to the 113 target, leaving 112 as near-term support. We expect an extension towards the 113 area before resumption of the downside towards at least 109,75.