It appears China may not be buying more agriculture products from the U.S. any time soon as both the Montana Farm Bureau and the Nebraska Department of Agriculture have said that the Chinese delegation has canceled visits with them and is returning to China sooner than expected. This comes after U.S. President Trump said Chinese agricultural purchases will not be enough to complete a deal with China. He also said that he does not need a deal before the 2020 election and that China is “eating” the tariffs.
Upon the announcement that China was leaving, the S&P 500 sold off aggressively from 3008.8 down to as low at 2982.3. The equity indexbounced back to near 3000. Initial resistance now comes in at Friday’s highs of 3015.2. Above there, resistance comes in at 3022.5, the highs from September 13th.
Trendline resistance comes in near 3045. Initial support is at the day’s lows of 2982.3. Below there is horizontal support at 2958.2 and the 38.2% retracement from the August 23rd lows to the September 13th highs.
Gold also moved higher on the news into the weekend. The precious metal moved from 1500 up to near 1514 into the close. Trendline resistance come in at roughly 1517, the downward sloping trendline from September 6th. Above that, resistance comes in near 1520, which is the 50% retracement level from the September 4th highs to the September 18th lows. Support zone comes in at horizontal support of 1479 and the lows of September 18th at 1483.
The U.S. dollar pulled back after the announcement that China was leaving early. The DXY was on a one way move higher during all of Friday morning’s trading, from 98.13 to 98.63. However after the announcement, it pulled back to 98.49. Given that DXY remained within the tight range that it has been in all week, Friday’s move was unspectacular. The U.S. Dollar Index has traded between 98.13 and 98.74 most of the week. It will take a breakout from either of these levels to determine the direction of the next move.
Things should be interesting over the weekend if comments, headlines, and tweets continue to come from the White House regarding China, or if there is a verbal response from China. Watch for possible gaps on the reopen.
China Response To Trump Comments Weighs On S&P 500, Boosts Gold
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