US Futures Build on Wednesday’s Impressive Bounce

Wall Street Seen Adding to Wednesday’s Rebound

After staging a strong recovery on Wednesday, US equity markets are poised to open in the green once again on Thursday as investors temporarily shrug off trade war fears.

The bounce on Wednesday was really quite impressive, especially as there was not much of a catalyst for the turnaround given that neither the US or China is backing down on tariffs and negotiations were always going to take place in the background. Perhaps the fact that indices were once testing levels that had previously been bought on a few occasions over the last couple of months had something to do with the sudden desire to jump back in.

The reality is that a trade war remains a real possibility. US President Donald Trump is looking to pick a fight with the world’s second largest economy, a fight he believes is easy to win, and China is willing to go toe to toe with the US even if it means inflicting harm at home. It’s hard to see how anyone wins in this but investors currently, despite the declines we’ve seen, are expressing confidence that a solution will be found before a full blown trade war erupts.

Trade Wars or a War of Words

US Trade Data of Interest Given Current Environment

Thursday is shaping up to be one of the quieter days of the week from a US perspective, possibly the calm before the storm that is the US jobs report. The trade balance data really stands out for the US today, more so from a headline perspective than something that will likely be particularly market moving. Jobless claims is the only other notable release although we will also hear from Raphael Bostic, a voting member on the FOMC this year who supports gradual rate hikes and a move back to the neutral rate.

USD/JPY – Yen Edges Lower, Japanese Household Spending Next

Weaker European Services Surveys Nothing To Be Concerned About

There’s been plenty of economic data already from the Europe this morning, with services PMIs from across the region for March being released, as well as retail sales figures for the euro area. As was to be expected, we did see a slowdown in the surveys driven by a number of factors, most notably bad weather and supply side constraints.

GBPUSD Daily Chart

OANDA fxTrade Advanced Charting Platform

Given the strength of the surveys previously, I don’t think this is anything to be concerned about though and this has been reflected by the muted reaction to the releases in the markets. The euro is off only slightly on the day while the pound is down around 0.2% against the dollar. Still, they’re both not far from their recent highs against the dollar, which has done better the last couple of weeks but is struggling to break significantly off its lows.

Economic Calendar

For a look at all of today’s economic events, check out our economic calendar.

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Craig Erlam

Craig Erlam

Senior Currency Analyst at OANDA
Based in London, England, Craig Erlam joined OANDA in 2015 as a Market Analyst. With more than five years' experience as a financial market analyst and trader, he focuses on both fundamental and technical analysis while conducting macroeconomic commentary. He has been published by The Financial Times, Reuters, the Wall Street Journal and The Telegraph, and he also appears regularly as a guest commentator on networks including Sky News, Bloomberg, CNBC and BBC. Craig holds a full membership to the Society of Technical Analysts and he is recognized as a Certified Financial Technician by the International Federation of Technical Analysts.