News & Analysis at your fingertips.

We use a range of cookies to give you the best possible browsing experience. By continuing to use this website, you agree to our use of cookies.
You can learn more about our cookie policy here, or by following the link at the bottom of any page on our site.

0

Notifications

Notifications below are based on filters which can be adjusted via Economic and Webinar Calendar pages.

Live Webinar

Live Webinar Events

0

Economic Calendar

Economic Calendar Events

0
Free Trading Guides
Subscribe
Please try again
EUR/USD
Bearish
Low
High
of clients are net long.
of clients are net short.
Long Short

Note: Low and High figures are for the trading day.

Data provided by
Oil - US Crude
Mixed
Wall Street
Mixed
Gold
Mixed
GBP/USD
Bearish
USD/JPY
Bullish
More View more
Real Time News
  • Forex quotes reflect the price of different currencies at any point in time. Since a trader’s profit or loss is determined by movements in price, it is essential to develop a sound understanding of how to read currency pairs. Learn how to read quotes here: https://t.co/CNtqrKWDBY https://t.co/vABKiG4WNe
  • A currency carry trade involves borrowing a low-yielding currency in order to buy a higher yielding currency in an attempt to profit from the interest rate differential. Find out if the carry trade suits your trading style here: https://t.co/7t4BzmLg8w https://t.co/IQyDCjb5Dn
  • Get your snapshot update of the of top level exchanges and key index performance from around the globe here: https://t.co/d8Re5anlG5 https://t.co/xFYoNUKhsM
  • Currency exchange rates are impacted by several factors. Are different world leaders a contributing factor? Find out here: https://t.co/4jsORznRTE https://t.co/ZjrCYXTIdD
  • Many people are attracted to forex trading due to the amount of leverage that brokers provide. Leverage allows traders to gain more exposure in financial markets than what they are required to pay for. Learn about FX leverage here: https://t.co/BdgFmkRxVw https://t.co/dPE4AsJxqv
  • What are some trading takeaways from 2020, as we jump into the new year? Find out with your free guide here: https://t.co/e7udCTJlmf #DailyfxGuides https://t.co/9bsQkh2WMF
  • Trading Forex is not a shortcut to instant wealth, excessive leverage can magnify losses, and sentiment is a powerful indicator. Learn about these principles in depth here: https://t.co/lZFM8youtX https://t.co/DJccj3qiig
  • Risk management is one of the most important aspects of successful trading, but is often overlooked. What are some basic principles or risk management? Find out from @PaulRobinsonFX here: https://t.co/IsnpfJhp91 https://t.co/UK4E7wD6s8
  • Copper is on track to make a sixth consecutive monthly gain as prices inch towards its all-time high. The global backdrop remains supportive despite a short-term pause in the rally. Get your market update from @FxWestwater here:https://t.co/STEYeIG042 https://t.co/R794ENkS3c
  • Retail trader signals still hint that the Dow Jones and S&P 500 may be at risk, placing the focus on year-long rising trendlines to see if dominant upside biases hold.Get your market update from @ddubrovskyFX here:https://t.co/lFpzIFNmzW https://t.co/FoHTLDJWJe
Stock Market Outlook: Dow Eyes China Tension & Dollar-Yuan

Stock Market Outlook: Dow Eyes China Tension & Dollar-Yuan

Rich Dvorak, Analyst

DOW JONES PRICE OUTLOOK: STOCK MARKET AT RISK AMID ESCALATING CHINA TENSION & ACCELERATING NEW VIRUS CASES

  • Dow Jones performance for 2Q-2020 recorded a spectacular 18% rally but is still lower by about 10% year-to-date due to sharp losses notched in February and March
  • USD/CNH price action has consolidated as global economic powerhouses US and China clash over the coronavirus pandemic and Hong Kong national security legislation
  • US Dollar to Chinese Yuan exchange rate could serve as a bellwether to Sino-American trade tension and where the Dow Jones Industrial Average might head in 3Q-2020

Equities have exploded higher over the last three months. The Dow Jones Industrial Average, for instance, staged a remarkable 18% gain during the second quarter of 2020. Other US equity indices, like the S&P 500 and Nasdaq, led the Dow with gains even more impressive. Recent stock market upside largely follows unparalleled amounts of liquidity and stimulus provided by central banks and governments around the world.

Wall Street MIXED
Data provided by
of clients are net long. of clients are net short.
Change in Longs Shorts OI
Daily -7% 1% -3%
Weekly -2% -3% -3%
What does it mean for price action?
Get My Guide

As global officials pump up stocks and investor confidence, however, the risk of equities becoming increasingly detached from their economic fundamentals seems to have grown exponentially. Complacency has ballooned alongside the Federal Reserve balance sheet, which has widely contributed to unwavering risk appetite, and led some market participants to incorrectly believe the troubling and misleading mantra that “stocks only got up.” To be clear, stocks can, and eventually do, go down.

Read More – S&P 500 Forecast: Stocks Face Peril as Day of Reckoning Looms

DJIA – DOW JONES INDUSTRIAL AVERAGE & SPOT USD/CNH PRICE CHART: DAILY TIME FRAME (MAR 2019 TO JUN 2020)

DJIA Price Chart Dow Jones Industrial Average Stock Market Outlook

Chart created by @RichDvorakFX with TradingView

That said, rekindled US-China trade uncertainty, in addition to a plethora of other material downside risks, threaten to undermine the latest rally set forth by the Dow Jones and other stock market benchmarks. Seeing that the United States and China are the two largest economies in the world, bilateral trade and economic cooperation between Washington and Beijing remains vital to global GDP growth.

Read More – A Brief History of Trade Wars

USD/CNH PRICE CHART: DAILY TIME FRAME (30 MAR TO 30 JUN 2020)

USD to CNH Price Chart US Dollar Chinese Yuan Trade Tension Uncertainty Hong Kong Coronavirus

Also, escalating US-China tension has potential to spoil the phase one trade deal signed by President Trump and Vice Premier Liu He earlier this year. Over the several weeks, relations have deteriorated notably on the back of the freshly-signed Hong Kong national security law. In response, the US just added Chinese technology giants Huawei and ZTE to its list of national security threats, which likely cues up subsequent retaliation from Beijing.

Forex for Beginners
Forex for Beginners
Recommended by Rich Dvorak
Forex for Beginners
Get My Guide

Correspondingly, traders may want to keep close tabs on spot USD/CNH price action going forward considering the Dollar-Yuan has potential to serve as a US-China trade war gauge. In light of the inverse relationship typically observed between spot USD/CNH and the Dow Jones, a breakdown in the Chinese Yuan could create serious headwinds for stocks currently trading at astronomical valuations.

Read More – US Dollar, Nasdaq, Chinese Yuan React to Trump-China Presser

-- Written by Rich Dvorak, Analyst for DailyFX.com

Connect with @RichDvorakFX on Twitter for real-time market insight

DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.

DISCLOSURES