Markets edged lower yesterday amid a broader risk-off mood brought upon by fresh airbus tariffs, weak U.S. data a heated impeachment inquiry into Donald Trump, and a convoluted last-minute Brexit plan by U.K. PM Boris Johnson. Yesterday, U.S. House leaders threatened to subpoena the White House if it refused to hand over all records related to the impeachment inquiry by Friday.
Recession on the Horizon?
Weak U.S. data have increased fears for a recession which is expected to take global dimensions. Market participants will be looking closely at the ISM data today in the services sector to see whether there is a spillover effect from manufacturing which would indicate that the US consumer market - on which the entire US economy is built - might be facing more and more challenges soon and further reinforce expectations of an oncoming recession.
Donald Trump is accusing the Democrats and the Fed for being the forces responsible for the broader economic decline, while from my point of view the trade war is just as much if not, even more, a very relevant factor behind the troubles of the U.S. Hu Xijin the editor-in-chief of the Global Times, China's most prominent state-run newspaper, has also tweeted that the US economy does not look to be in “as good shape” as the White House likes to “brag about” which adds to his comments that China’s recent buying US farm products was a gesture of goodwill and not a concession. Hu Xijin’s statements clearly indicate that there is anything but friendship between China and the US.
Fresh EU Tariffs
Meanwhile, the World Trade Organization stated that the U.S. can move forward with plans to impose some $7.5 billion in tariffs on EU goods annually, to counteract years of European loans and illegal subsidies to Airbus. The new tariffs will kick in on Oct 18th and add further pressure on the global economy. The German Dax responded by posting one of its biggest daily declines in recent years yesterday shedding almost 3%. Since today is a national holiday in Germany and the DAX is not trading, it might be a chance for the Dax to prevent a further sell-off for the moment.
Forex Preview: Dollar Tumbles
The USD lost some more ground yesterday on further negative data such as the ADP and is awaiting today's services ISM for more direction. Elsewhere, the EUR failed to break the 1.0960 and is facing many hurdles that could prevent further EUR upside despite a bit of weakness in the USD. The GBP is steady at present levels but with risk for more downside given that many EU sources have commented on PM Johnson's new Brexit proposals to be "a million miles away from agreeable".
Oil Dips, Gold Set to Break Above $1,500
Oil prices lost further and could be even targeting the $50 now on further global economic contraction while the big build in the crude oil stocks yesterday came as an added catalyst. Elsewhere, safe haven spot-gold is benefitting from all the upheaval in the markets and could soon be trading above the $1,500 level again.
Meanwhile, cryptocurrency markets remain bearish with BTC having repeatedly failed to push above the 200-Day SMA but refraining from losing further which makes its outlook neutral for now and for as long as the 8k mark holds.
Watch the video here:
Recession on the Horizon?
Weak U.S. data have increased fears for a recession which is expected to take global dimensions. Market participants will be looking closely at the ISM data today in the services sector to see whether there is a spillover effect from manufacturing which would indicate that the US consumer market - on which the entire US economy is built - might be facing more and more challenges soon and further reinforce expectations of an oncoming recession.
Donald Trump is accusing the Democrats and the Fed for being the forces responsible for the broader economic decline, while from my point of view the trade war is just as much if not, even more, a very relevant factor behind the troubles of the U.S. Hu Xijin the editor-in-chief of the Global Times, China's most prominent state-run newspaper, has also tweeted that the US economy does not look to be in “as good shape” as the White House likes to “brag about” which adds to his comments that China’s recent buying US farm products was a gesture of goodwill and not a concession. Hu Xijin’s statements clearly indicate that there is anything but friendship between China and the US.
Fresh EU Tariffs
Meanwhile, the World Trade Organization stated that the U.S. can move forward with plans to impose some $7.5 billion in tariffs on EU goods annually, to counteract years of European loans and illegal subsidies to Airbus. The new tariffs will kick in on Oct 18th and add further pressure on the global economy. The German Dax responded by posting one of its biggest daily declines in recent years yesterday shedding almost 3%. Since today is a national holiday in Germany and the DAX is not trading, it might be a chance for the Dax to prevent a further sell-off for the moment.
Forex Preview: Dollar Tumbles
The USD lost some more ground yesterday on further negative data such as the ADP and is awaiting today's services ISM for more direction. Elsewhere, the EUR failed to break the 1.0960 and is facing many hurdles that could prevent further EUR upside despite a bit of weakness in the USD. The GBP is steady at present levels but with risk for more downside given that many EU sources have commented on PM Johnson's new Brexit proposals to be "a million miles away from agreeable".
Oil Dips, Gold Set to Break Above $1,500
Oil prices lost further and could be even targeting the $50 now on further global economic contraction while the big build in the crude oil stocks yesterday came as an added catalyst. Elsewhere, safe haven spot-gold is benefitting from all the upheaval in the markets and could soon be trading above the $1,500 level again.
Meanwhile, cryptocurrency markets remain bearish with BTC having repeatedly failed to push above the 200-Day SMA but refraining from losing further which makes its outlook neutral for now and for as long as the 8k mark holds.
Watch the video here: