Originally published by Blueberry Markets
Looking into next week we need to keep a close eye on the trade talks between the White House and China ahead of the March 1st deadline. It is likely that President Trump will extend the deadline for the trade tariffs as he negotiates terms with China. However, President Trump is an unpredictable character and if he doesn’t agree the terms, he could stick to the March 1st deadline. This could be a definitive week for the Australian dollar and New Zealand dollar as they will be most affected by these trade talks. If the market runs to risk on with trade talks progressing, the AUD and NZD will likely benefit and head higher. The US stock markets will also benefit from progressing trade talks and will remain on a heading towards the all-time highs.
The data this week focuses heavily on the US as we see Fed Chair Powell testify on the economic outlook in Washington DC before the Joint Economic Committee. The Q&A section is where investors will be focusing on any changes in tone or outlook on the current data. The data out of the US does remain poor and this looks likely to continue with global growth remaining a concern.
Investors will have to wait until Friday to see if the slowdown in the Eurozone will continue as German Manufacturing PMI and German unemployment Change is set to be released early European trading. European CPI year on year follows on from this with forecasts showing growth of 0.1%. The German data beforehand will give us a clue to how the CPI data will play out. A slowdown here will likely push the EURUSD further towards 1.1200.
The US Dollar Index currently shows the US dollar forming a bearish descending triangle pattern, if price is to break lower, we should expect a fall into the $96.00 support. Price attempted to break above the $96.60 minor resistance with no luck showing signs that sellers remain in control.
AUDUSD technically looks bearish with price testing a minor resistance zone and bearish trendline resistance. Despite the chart technically looking bearish, with the US dollar weakness the AUDUSD should benefit and will likely trade back towards the weekly trendline resistance.
The Dow Jones Industrial looks to continue it’s gains with price heading back towards the all-time highs. If the market runs to a risk on sentiment the 26797.0 highs will be targets for the stock index. In an unlikely situation that trade talks break down prices could quickly fall back into the 25340 support.