Again and again, and again, and then an infinite number of times, the topic of the US-Chinese negotiations hangs over the financial markets

A few days ago, optimism spread across the trading floors. Investors were very enthusiastic about the signing of a new trade agreement between Washington and Beijing, which had a significant impact on the value of defensive assets as well as the growth in demand for risky ones. However, as the history of the US-China trade dispute shows, there seem to be so far insurmountable problems that do not allow ending this destructive trade war for the world economy.

Here is yesterday's statement by US Secretary of Commerce W. Ross that there are risks of delaying the signing of the "phase one" of agreements and the inability of the parties to agree on a venue, pushes investors again, as they say, out of the fire and into the fire. Against this backdrop of uncertainty, the demand for protective assets rose again. In addition, benchmark yields on 10-year US traders fell sharply to 1.873% after reaching a local maximum on Wednesday and on Tuesday, fell to 1.830%, and continues to decline in electronic trading in the Asian trading session. On this wave, gold received support, which still remains sandwiched in a narrow range of 1476.80-1514.00. For the second day, the Japanese yen has been noticeably strengthened against the dollar.

Strong pressure on the risk of lower interest rates in the long term remains in the New Zealand dollar, which, together with the Australian dollar, is further adversely affected by the prolongation of trade negotiations between the US and China. At the same time, the common European currency remains under noticeable pressure, which, in our opinion, receives a double blow. On the one hand, it is a decrease in demand for risky assets, and on the other hand, it is an increase in the possibility that the Fed may stop the rate reduction process altogether if the US economy stabilizes, and in the end, the trade compromise reached will support it. We still consider the euro to be an outsider in the currency exchange market, which risks, with this scenario, are testing the lows of the beginning of 2017 again.

Forecast of the day:

The EUR/USD pair continues to implement a double top reversal pattern. We expect the pair to continue to fall to 1.1000.

The NZD/USD pair remains under pressure in the wake of a high probability of lowering the interest rates of the RBNZ in the near future. The pair also forms a double top reversal pattern. Overcoming the price line of the "neck" 0.6335 will lead to a fall in prices to 0.6280 or even lower to 0.6245.