Statements by Donald Trump that the Chinese made phone calls to advance trade negotiations with the U.S. inspired a heavy recovery in global bourses yesterday. The problem, however, is that China is very much denying Trump’s claims, and even Trump himself is becoming increasingly evasive when asked directly, saying he would not like to talk about the calls. This means that yesterday’s recovery appears to have been based on "fake news" while neither the trade war is de-escalated by one tiny bit, nor economic data i.e. IFO index out of Germany which was very weak, suggests that there is anything "good" happening when it comes to the state of the global economy. For now, markets seem to be in limbo without particular direction and remain extremely vulnerable to geopolitical developments.
Forex Preview: USD Regains Power
The USD gained some strength back on the turnaround in the markets while Trump seems to be playing a dangerous game in trying to escalate the trade war just enough to force the Fed's hand. Elsewhere the EUR remains under stress with mounting pressure from economic weakness, the situation in Italy needing to form a coalition today, and the ongoing Brexit battlefront. The GBP also could be turning lower as PM Johnson is also playing a dangerous game when he claims that he will be able to force through a no-deal Brexit and not pay the divorce bill but use the funds domestically if the EU doesn’t give in to his demands at the negotiations.
Oil Prices Recover Slightly
Meanwhile, oil prices recovered on lingering hopes for a U.S./China trade resolution, even though everything points to Trump just exaggerating China’s willingness to compromise. Even so, markets seem to still have some optimism with oil prices gaining back some ground after noting sharp losses on the outlook for increased supply of Iranian crude after France's president lifted hopes for a deal between Washington and Tehran.
Gold Prices Stan Firm, BTC
Safehaven gold prices stood their ground today after retreating from an over six-year peak hit in the previous session. XAU/USD remains above the $1,530 level and could edge higher if risk-off mood returns. Given that the trade relationship between U.S. and China is extremely fragile and that Trump is becoming largely evasive about the state of the negotiations, optimism could quickly fade. Elsewhere, bitcoin slid today, currently stuck around the 10k level and seems to need more impulses to move away from that level.
Watch the video here:
Forex Preview: USD Regains Power
The USD gained some strength back on the turnaround in the markets while Trump seems to be playing a dangerous game in trying to escalate the trade war just enough to force the Fed's hand. Elsewhere the EUR remains under stress with mounting pressure from economic weakness, the situation in Italy needing to form a coalition today, and the ongoing Brexit battlefront. The GBP also could be turning lower as PM Johnson is also playing a dangerous game when he claims that he will be able to force through a no-deal Brexit and not pay the divorce bill but use the funds domestically if the EU doesn’t give in to his demands at the negotiations.
Oil Prices Recover Slightly
Meanwhile, oil prices recovered on lingering hopes for a U.S./China trade resolution, even though everything points to Trump just exaggerating China’s willingness to compromise. Even so, markets seem to still have some optimism with oil prices gaining back some ground after noting sharp losses on the outlook for increased supply of Iranian crude after France's president lifted hopes for a deal between Washington and Tehran.
Gold Prices Stan Firm, BTC
Safehaven gold prices stood their ground today after retreating from an over six-year peak hit in the previous session. XAU/USD remains above the $1,530 level and could edge higher if risk-off mood returns. Given that the trade relationship between U.S. and China is extremely fragile and that Trump is becoming largely evasive about the state of the negotiations, optimism could quickly fade. Elsewhere, bitcoin slid today, currently stuck around the 10k level and seems to need more impulses to move away from that level.
Watch the video here: