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Traders Spooked by Huawei Arrest06 December 2018 by Dave Evans

Morning Report: 07.00 London

Markets have been hit by a wave of risk-aversion on the arrest of Huawei CFO Meng Wanzhou. The yen is in demand, along with safe haven favourite the Swiss franc.

Yen pairs are on the back foot, led by the rapid collapse of the AUD/JPY which is being hit due to its close reliance on the Chinese economy. The pair is down by nearly 1% today and 2% over the last 48 hours.

The EUR/JPY and GBP/JPY have reversed most of yesterday’s gains on general risk aversion. The USD/JPY is also on the back foot, though with only moderate selling on dollar strength.

The dollar index is testing the November highs as money flows back into safer havens. The AUD/USD is experiencing the biggest falls across dollar pairs, dropping from 0.7400 to 0.7200 in the space of a week.

The EUR/USD is down, while the GBP/USD is holding up relatively well after two volatile days of trading.

The USD/CAD has push to its highest levels for 2018 after three days of solid gains.

The USD/CHF was rejected from the parity line once again, but there are small gains made this morning.

Coming up today

MPC Member Ramsden speaks at 10.00

US ADP Non Farm Employment Change is at 13.15

Canadian trade balance is at 13.30.

BOC governor Poloz speaks at 13.35.

US ISM Non-Manufacturing PMI is at 15.00.

US crude oil inventories are at 16.00.

FOMC member Bostic speaks at 17.15, with Williams speaking at 23.30.

Fed Chair Powell speaks at 23.45.

Trade Idea

The Aussie dollar has been hit hard by China contagion, slipping back hard in the last few days.

The long term trend remains negative, making a lower trade attractive.

Traders Spooked by Huawei Arrest

A good way to play this is a LOWER trade predicting that the AUD/USD will close below 0.7200 in 14 days for a potential return of 125%.

Traders Spooked by Huawei Arrest