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
EUR/USD
Mixed
Oil - US Crude
Mixed
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
Wall Street
Mixed
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
Gold
Mixed
GBP/USD
Bullish
USD/JPY
Bullish
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
More View more
Real Time News
  • Implementing a trading checklist is a vital part of the trading process because it helps traders to stay disciplined, stick to the trading plan, and builds confidence. Learn how to stick to the plan, stay disciplined, and use a checklist here: https://t.co/2MCG036HGH https://t.co/CbnRsuyRwi
  • #Gold saw its worst performance the past 5 days in 5 months as longer-dated government bond yields in developed countries rose Could this be the beginning of a turning point in #XAUUSD? https://www.dailyfx.com/forex/fundamental/forecast/weekly/chf/2020/08/15/Gold-Price-Outlook-Will-XAUUSD-Brush-off-Worst-Week-in-5-Months.html?CHID=9&QPID=917702&utm_source=Twitter&utm_medium=Dubrovsky&utm_campaign=twr https://t.co/x2Indk3b7P
  • Did you know a Doji candlestick signals market indecision and the potential for a change in direction. What are the top five types of Doji candlesticks? Find out: https://t.co/td5WA4hCZC https://t.co/PT09ZsIOCa
  • The US #Dollar may rise, buoyed by haven demand as fiscal stimulus talks stagnate and swelling tensions between Washington and Beijing sink trade talks. Get your #currencies update from @DanielGMoss here: https://t.co/Wcw9PDUr67 https://t.co/gnYZYl6aLV
  • Upside in #CrudeOil struggling ahead of #OPEC meeting. Cartel likely to maintain wait and see approach. Get your #commodities update from @JMcQueenFX here: https://t.co/gNHHKoTUzm https://t.co/eF40DRIBJ5
  • #Gold had some big moves last week, and while vol is expected to die down a bit, it will be important to see if gold can hold its ground in the coming days/weeks. Get your #metals update from @PaulRobinsonFX here: https://t.co/N8a84hRnHN https://t.co/3fjodPHTDm
  • The S&P 500's refusal to hit a record and Dollar's anchor to range this past week is sign of summer liquidity conditions, but the quiet is not insurmountable. 'S&P 500 Record and Dollar Break Look to Stimulus and Trade to Override Seasonality' https://www.dailyfx.com/forex/video/daily_news_report/2020/08/15/SP-500-Record-and-Dollar-Break-Look-to-Stimulus-and-Trade-to-Override-Seasonality-.html https://t.co/mbvPkdQfYl
  • Get your snapshot update of the of relative currency strength and exchange status from around the globe here: https://t.co/DmhBkcMZBK https://t.co/kFk6ccU3Sk
  • The Federal Reserve System (the Fed) was founded in 1913 by the United States Congress. The Fed’s actions and policies have a major impact on currency value, affecting many trades involving the US Dollar. Learn more about the Fed here: https://t.co/ADSC4sIHrP https://t.co/aXSB0bG3y0
  • Take a closer look visually at the most influential global importers and exporters here: https://t.co/1G7CRsegRX https://t.co/i342ipPuvW
ASX 200 Stock Index Remains Capped amid Australia-China Trade Tensions

ASX 200 Stock Index Remains Capped amid Australia-China Trade Tensions

2020-07-14 02:00:00
Daniel Moss,
Share:

ASX 200 Index, Australia-China Trade Tensions, National Security Law – Talking Points:

  • Deterioration of Australia’s relationship with its largest trading partner, China, continues to hamper the performance of regional risk assets
  • The ASX 200 stock indexcontinues to struggle at resistance as technical divergence hints at potential reversal. Is this the end of the road for the Australian benchmark index?

Australia-China Trade Tensions Capping Regional Risk Assets

Deterioration of Australia’s relationship with its largest trading partner, China, continues to hamper the ASX 200 index’s recovery from yearly lows, as it fails to break above key resistance at the 6,200 level.

This pivotal relationship has become increasingly strained in recent days with the Chinese Ministry of Foreign Affairs (MFA) upgrading their travel advice, reminding “Chinese citizens to be extra careful about the local security risks and be cautious about travelling to Australia in the near future”.

At the heart of the issue, Beijing’s imposition of a new national security law in Hong Kong, undermining the ‘One Country, Two System’ constitutional principle of the Special Administrative Region (SAR).

Representing a “fundamental change of circumstances” in the financial hub Prime Minister Scott Morrison’s condemnation of the laws, and subsequent termination of Australia’s extradition treaty with Hong Kong, has unsurprisingly ruffled Beijing’s feathers.

ASX 200 Stock Index Remains Capped amid Australia-China Trade Tensions

Data Source - Bloomberg

Moreover, the decision to extend visas and offer a pathway to permanent residency for some Hong Kongers was lambasted by the Chinese embassy in Canberra, claiming the “groundless accusations and measures announced by the Australian Government [are] a serious violation of international law and basic norms governing international relations, and a gross interference in China’s internal affairs”.

So far, the tit-for-tat exchanges have resulted in minimal economic repercussions for Australia with travel warnings hardly debilitating at the current moment in time as borders remain closed to international travellers for the foreseeable future.

However, Beijing has warned of consequences for those who “interfere in [China’s] internal affairs” and may up the ante in terms of retaliation, with scope to target Australian exports having already imposed an 80% tariff on barley earlier this year.

Australian Exports by Category

ASX 200 Stock Index Remains Capped amid Australia-China Trade Tensions

Source – Trading Economics

With China’s barley purchases in 2019 only accounting for $600 million, the targeted imposition of these tariffs served as a warning that outsiders meddling in “internal affairs” will be punished.

Continued escalation may force Beijing’s hand and could possibly lead to $80 billion worth of iron ore exports - that remain pivotal in underpinning the local economy – falling into the Asian powerhouse’s crosshairs.

To that end, the development of this pivotal relationship will be intently watched by market participants, with any form of retaliatory escalation potentially fueling a period of risk aversion and heavy discounting of regional risk assets.

ASX 200 Daily Chart – The RSI Hints at Potential Reversal at Key Resistance

Image of ASX 200 Price Daily Chart

ASX 200 daily chart created using TradingView

From a technical perspective, the ASX 200 index’s outlook remains skewed to the downside as resistance at the 61.8% Fibonacci continues to diffuse any form of bullish potential.

With the RSI tentatively breaking its constructive 4-month trend and price failing to hold above the psychologically imposing 6,000 level, a break below the uptrend extending from the June low (5,682) looks in the offing.

Although the slope of the 50-day moving average (5,792) is notably positive, the steepness has faded significantly over the past month of trade, reinforcing the lack of bullish impetus seen in recent price action.

A daily close below the 50% Fibonacci (5,792) would probably result in a sustained decline back to the 38.2% Fibonacci (5,461) and potentially signal a resumption of the yearly downtrend.

Conversely, a break above the 61.8% Fibonacci (6,124) and June high (6,198) may ignite a surge to test the March high (6,524), should buyers successfully overcome sentiment-defining resistance at the 200-day moving average (6,236)

-- Written by Daniel Moss, Analyst for DailyFX

Follow me on Twitter @DanielGMoss

Building Confidence in Trading
Building Confidence in Trading
Recommended by Daniel Moss
Building Confidence in Trading
Get My Guide

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

DISCLOSURES

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.