Trade Frictions Continue

by Archer Financial Services | Apr 02, 2018

By Alan Bush | Senior Financial Economist at ADMIS   


Stock index futures fell after overnight China announced that starting today it would impose tariffs by up to 25% on 128 U.S. products in response to U.S. duties on imports of aluminum and steel.

The negative market impact of this appeared to be partially mitigated when China urged trade talks with the U.S. to prevent greater damage to relations.

The 8:45 central time March manufacturing PMI is expected to be 55.7.

The 9:00 March Institute for Supply Management manufacturing index is anticipated to be 60 and the 9:00 February construction spending report is estimated to be up .5%.

Ongoing trade issues will only temporality pressure futures.  



The U.S. dollar is lower and the euro currency is higher in spite of increasing probabilities of a fed funds rate hike in June.

Longer term, the currency of the euro zone is likely to be supported by the belief that the European Central Bank could increase interest rates in the first quarter of next year.

I continue to anticipate the double top resistance at the 1.26500 - 1.26580 area in the June euro currency to be taken out, although it may take some time.

The Japanese yen is higher in spite of news that the Bank of Japan's quarterly “tankan” survey showed confidence among Japan's large manufacturers weakened for the first time in two years in the first quarter.

Large manufacturers' sentiment was at 24 in the first three months of this year, which compared with 25 in the previous survey that was taken in December. 



Futures are lower due to increasing prospects of tighter credit from the Fed.

Also, there appeared to be no flight to quality buying in spite of the ongoing trade frictions between the U.S. and China.

Minneapolis Federal Reserve Bank President Neel Kashkari will speak at 5:00 this afternoon.

The probability of a fed funds rate hike from the Federal Open Market Committee at the June 13 meeting is 85%, which compares to 79% late last week.




June 18   S&P 500

Support    2623.00       Resistance    2644.00


June 18   U.S. Dollar Index

Support    89.330         Resistance    89.730


June 18   Euro Currency

Support    1.23730       Resistance    1.2424


June 18   Japanese Yen

Support    .94310         Resistance    .94690


June 18   Canadian Dollar

Support    .77550         Resistance    .77850


June 18   Australian Dollar

Support    .7661           Resistance    .7701


June 18   Thirty Year Treasury Bonds

Support    145^26        Resistance    146^16


June 18   Gold

Support    1326.0         Resistance    1347.0


May 18   Copper

Support    3.0350         Resistance    3.0750


May 18   Crude Oil

Support    64.02           Resistance    65.55

For more information about these markets, please contact Alan at 312.242.7911  or via email at alan.bush@admis.com. Thank you.

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