Global equities fell yesterday, especially in peripheral Europe, where indices were down 2-3% on the back of political upheaval in Italy and fresh broadsides in the US/ China trade war. Safe haven US Treasury bonds, the JPY, the USD and gold rallied, while EURUSD dropped to a 10-month low.
In Italy, snap elections became increasingly likely after premier-designate Cottarelli did not find an agreement on a new cabinet to present to the head of state. However, most recent local headlines (Huffington Post, La Stampa) suggest that 5Ms and Lega would cooperate to avoid new elections.
As a result, EURUSD sold off and fell to 1.1510 yesterday (Bloomberg). Our traders currently see resistance at 1.1650 ahead of 1.1730, while support comes in at 1.1500 and 1.1430.
US-China trade tensions heightened again after the White House stated yesterday afternoon that it is moving ahead with the $50bn worth of tariffs on Chinese goods and curbs to Chinese investment in sensitive technology, with the final list of targeted imports released on 15th June.
GBP fell yesterday amid reports that little progress has been made on the Irish Border conflict as the June summit and the votes in the House of Commons are moving closer (Bloomberg). GBPUSD will likely be prone to any further headlines as well as the 2nd release of US GDP at 13.30.