{"id":149056,"date":"2019-06-05T10:06:02","date_gmt":"2019-06-05T14:06:02","guid":{"rendered":"https:\/\/www.countingpips.com\/?p=149056"},"modified":"2019-06-05T08:07:01","modified_gmt":"2019-06-05T12:07:01","slug":"fed-pledges-economic-support-sending-equities-soaring","status":"publish","type":"post","link":"https:\/\/www.investmacro.com\/forex\/2019\/06\/fed-pledges-economic-support-sending-equities-soaring\/","title":{"rendered":"Fed Pledges Economic Support, Sending Equities Soaring"},"content":{"rendered":"
June 5, 2019<\/div>
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By <\/strong>Orbex<\/strong><\/a><\/p>\n

Risk appetite has improved into the middle of the week<\/strong>\u00a0with US equities posting a strong recovery yesterday, following the heavy declines of last week. The recovery came in response to comments made by Fed chairman Jerome Powell in Chicago yesterday.\u00a0Powell noted that the Fed would ensure that the US maintained its current economic expansion if the economy started to suffer as a result of Trump\u2019s trade war.<\/strong><\/p>\n

Powell Addresses Trade War Concerns<\/strong><\/h2>\n

Commenting on the ongoing trade tensions, Powell said<\/p>\n

\u201cWe do not know how or when these issues will be resolved\u2026\u00a0We are closely monitoring the implications of these developments for the U.S. economic outlook and, as always, we will act as appropriate to sustain the expansion,<\/strong>\u00a0with a strong labor market and inflation near our symmetric 2 percent objective.\u201d<\/p><\/blockquote>\n

Market Expecting Rate Cuts<\/strong><\/h2>\n

Although Powell didn\u2019t explicitly mention such action,\u00a0the market interpreted these comments as meaning that the Fed could move to cut rates if it deemed it necessary in a bid to backstop the economy.<\/strong>\u00a0The Fed has acknowledged the risks from Trump\u2019s trade war consistently over the last year and a half. They have often noted the uncertainty it contributes to its outlook.<\/p>\n

With the trade war having escalated again recently, the Fed will no doubt be keeping a close eye on incoming data to judge the impact of the tariffs.\u00a0Data released this week showed that\u00a0US manufacturing hit its lowest level<\/a>\u00a0of the last ten years over May.<\/strong><\/p>\n

Trade War\u2019s Raging<\/strong><\/h2>\n

Trump\u2019s trade war is now raging on all fronts.\u00a0The US recently increased 10% tariffs on $200 billion of Chinese goods to 25%.\u00a0<\/strong>They also threatened that it could also tariff the remaining $300 billion of Chinese goods entering the US annually. Alongside this,\u00a0Trump also recently announced that he plans to raise tariffs on EU and Japanese autos imports<\/strong>\u00a0to the US. He is currently in trade negotiations with both the EU and Japan.<\/p>

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Trump Raises Tariffs on All Mexcian Goods<\/strong><\/h2>\n

On top of the EU, Japanese & Chinese tariffs, just last week,\u00a0Trump dropped a bomb on financial markets. He announced his plan to tariff all Mexican goods crossing the US border.\u00a0<\/strong>This will come if the Mexican government doesn\u2019t act to restrict the flow of migrants entering the US. Despite protest,\u00a0Trump said that he will press ahead with a\u00a05% tariff on all Mexican goods<\/a>\u00a0until June 10th<\/sup>.\u00a0<\/strong>This could then be increased to 25% if the situation isn\u2019t dealt with.<\/p>\n

Trump\u2019s threat to Mexico was met with widespread disgust<\/strong>, even by members of his own party. They noted how wrong it was to use trade tariffs as a threat in a bid to deal with illegal immigration. Furthermore, such a move has provoked fears of mass disruption for US consumers and companies. This is especially for those in the autos and agricultural sectors.<\/p>\n

Trump Strips India Of Tariff Exemptions<\/strong><\/h2>\n

Finally,\u00a0Trump also announced late on Friday that he was removing India\u2019s special status as of today, June 5th<\/sup>.<\/strong>\u00a0This sees it exempt from billions of dollar\u2019s worth of products which could be tariffed going forward. Trump said this was in response to India having failed to give the US \u201cequitable and reasonable access to its markets\u201d.<\/p>\n

Technical Perspective<\/strong><\/h2>\n

\"SPX500\"<\/a><\/p>\n

The current move in the SPX500 is particularly interesting. Having broken down through the neckline of the smaller head and shoulders pattern to test support at the 2744.13 level, price has since recovered strongly and is now retesting the 2816.15 level from below.<\/p>\n

This level too could prove to be the right shoulder of a broader head and shoulders pattern. This is again putting the focus back on a move lower, with the 2744.13 level the neckline. A break above the current resistance would negate the pattern, however, putting focus on a rest of the 2856.30 next.<\/p>\n

By <\/strong>Orbex<\/strong><\/a><\/p>\n

 <\/p>\n","protected":false},"excerpt":{"rendered":"

By Orbex Risk appetite has improved into the middle of the week\u00a0with US equities posting a strong recovery yesterday, following the heavy declines of last week. The recovery came in response to comments made by Fed chairman Jerome Powell in Chicago yesterday.\u00a0Powell noted that the Fed would ensure that the US maintained its current economic […]<\/p>\n","protected":false},"author":3,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[],"tags":[],"class_list":["post-149056","post","type-post","status-publish","format-standard","hentry","no-post-thumbnail"],"_links":{"self":[{"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/posts\/149056","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/users\/3"}],"replies":[{"embeddable":true,"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/comments?post=149056"}],"version-history":[{"count":2,"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/posts\/149056\/revisions"}],"predecessor-version":[{"id":149058,"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/posts\/149056\/revisions\/149058"}],"wp:attachment":[{"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/media?parent=149056"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/categories?post=149056"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/tags?post=149056"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}