Tensions associated with the trade war are coming back with new comments from President Trump. The equity market is experiencing aversion to risk, but the currency market does not look nervous yet, because the attention stays anchored on the US labor market report.Futures contracts on the SP500 are losing 1%, although Nikkei drops by 0.2% in a more orderly manner. The Chinese market is still closed due to holidays, and the Hong Kong stock market makes up for Thursday's increases (+ 0.8 percent). USD/JPY initially dropped from 107.40 to 106.99 but managed to recover quickly. AUD, NZD and CAD are lower on a daily basis, but they distance themselves from session holes.
On Friday 6th of April, the event calendar is busy in important data releases, especially during the US session. The event of the day is the NFP-Payrolls data release, together with Average Hourly Rate, Unemployment Rate. Moreover, at the end of the trading day, FED Chair Jerome Powell will give a speech.
SP500 analysis for 06/04/2018:
Donald Trump ordered his administration to analyze the legitimacy of import duties from China worth an additional USD 100 billion. In a statement, Trump wrote that China has decided to do harm to American farmers and entrepreneurs, and China's response is "unfair". Trump also ordered the secretary of the economy to implement a plan to protect farmers' interests from the effects of Chinese activities. Presidential Trade Adviser Robert Lighthizer supported Trump's decision, defining it as responsible and correct. He added, however, that the additional duties would not be implemented until they had gone through the public consultation process. China responded to Trump's statement, recognizing the decision as violating the principles of international trade, but Beijing will defend its interests and is not afraid to go to a trade war, although it does not want it.
Let's now take a look at the SP500 technical picture at the H4 time frame. The bulls have managed to break through all of the intraday resistances and now the price is hovering just below the last technical resistance before the gap zone. The immediate support is seen at the level of 264.70, so if the NFP Payrolls data will beat the expectations, then the price might spike higher to fill the gap at the level of 270.30.
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