Trade tensions reach crescendo

6 August, 2019

Investors are struggling to shake off the pounding hangover from yesterday’s dramatic global selloff as US-China trade tensions took a dangerous turn for the worse.

Any hopes of a resolution to longstanding trade disputes between both sides were thoroughly quashed after the Chinese Yuan slipped past the psychological 7.0 mark for the first time since 2008. With the US Treasury Department wasting no time in labelling China a currency manipulator for the first time since 1994, this could open doors to more US sanctions against China. Heightened fears over trade disputes between the two largest economies in the world reaching a point of no return have crippled risk appetite, ultimately exposing global equities to downside shocks.

Asian shares were painted bright red this morning following Wall Street’s gut-wrenching declines overnight. The negativity from Asian markets is likely to contaminate European stocks this morning. US stocks experienced their single worst day of 2019 in the previous session, and could extend losses this afternoon as US-China trade tensions drain investor confidence.

Dollar fails to benefit from safe-haven flows


The mighty Dollar was attacked from all directions yesterday despite trade concerns boosting appetite for safe-haven assets.

Appetite towards the Dollar was most likely hit by the disappointing ISM Non-Manufacturing PMI which dropped to 53.7 in July – the lowest since August 2016. With growth in the US services sector cooling as trade worries impact business orders and the outlook for economic growth, expectations are bound to mount over the Federal Reserve cutting interest rates again in 2019.

Given how the Dollar remains extremely sensitive to rate cut speculation, investors should fasten their seat belts and brace for Dollar volatility this quarter.

Commodity spotlight – Gold


Gold is positioned to remain one of the prime destinations of safety this week as the horrible combination of US-China trade disputes and global growth concerns boost appetite for safe-haven assets.

Fears over intensifying trade tensions destabilizing global growth and stability have already elevated the precious metal to a fresh 6-year high above $1473 this morning. Although prices are slipping back towards $1460 as of writing, the precious metal remains technical and fundamentally bullish. For as long as risk appetite is dented by global growth fears, trade drama and Brexit uncertainty among many other geopolitical risk factors, Gold bulls will remain in the driving seat.

In regards to the technical picture, the solid daily close above $1460 may open the doors towards $1485 and $1500, respectively.


Source  
To believe or not to believe in virus vaccine hopes?20 May, 2020  

The euphoria that roared across financial market sentiment throughout yesterday and encouraged huge rallies in major U.S stock markets is running thin on flames today...

Gold blasts to new highs but can this joy last?19 May, 2020  

Investors are happy to add risk into portfolios with stocks and oil prices cheering this sentiment but at the same time, gold has reached its highest level...

Will the clock unveil more COVID-19 cases as restrictions ease?12 May, 2020  

Market volatility remains muted, however the crossroads appear to be getting closer where questions will be asked if eased restrictions are contributing...


Sell in May and go away?4 May, 2020  

On Covid-19 related news, states across the US are taking steps to restart the economy by easing stay-at- home orders and allowing non-essential businesses to reopen...

Will markets follow Pied Piper Powell?29 Apr, 2020  

The Dollar is weaker against all G10 and Asian currencies ahead of today's Fed rate decision and the US Q1 GDP announcement. The Dollar index (DXY) has been...

Gold dives despite market turmoil while Dollar surges22 Apr, 2020  

Gold struggled to shine on Tuesday, falling more than 1% as chaos in the oil markets triggered panic selling across the board and forced investors...


Gold Daily: Bullish sentiment prevailing15 Apr, 2020  

The price of Gold, on the D1 time-frame, made a short-lived downward shift until March 16 when a lower bottom was recorded at 1451.13. Buyers found the price attractive...

Markets path dictated by longevity of Covid-1915 Apr, 2020  

Asian stocks and currencies are mixed while US equity futures are pointing south, offering a relatively subdued reaction to more dire warnings about the fate...

COVID-19 pandemic: A bumpy road ahead8 Apr, 2020  

The world has finally seen a glimpse of light at the end of this dark tunnel. The coronavirus outbreak is starting to level off across many countries and cities...