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Will Central Bank Deluge Help Distract from Escalating Trade Tensions?

After a mixed session in Asia overnight, European bourses are looking to start trading for the new week in a mixed fashion. Whilst this week sees a busier economic calendar for traders than last, with central bank rate decisions from both the ECB and the BoE, it will take a lot of good news to distract traders from escalating trade tensions and unfolding emerging market crisis.

Whilst European and Asian markets traded heavily lower across the previous week, the Dow Jones was looking resilient in comparison. However, Friday, a sudden jump in US wages stoking fears of higher borrowing costs and renewed trade threats from President Trump, sent the US shares lower across the board and the dollar higher.

Trump threatened another round of trade tariffs on a further $267 billion worth of Chinese imports and promised that the tariffs on $200 billion worth of Chinese imports would take effect very soon. These latest threats highlight an apparently random nature and lack of planning in Trump's approach, which is enough to make even the most resilient of traders increasingly nervous. Calls from businesses against the levies have fallen on deaf ears in the White House, as Trump is making it his mission to tariff all imports from China.

Trade tension casualties

The longer these trade tensions continue, inevitably the more causalities that will arise. Volvo’s Chinese owner Geely delaying Volvo Cars IPO over concerns of valuation in light of the trade wars, plus a wobble in Apple’s suppliers in Asia overnight show that the impacts of these tensions are starting to show themselves more clearly in the markets and this will only continue until a breakthrough is agreed.

US jobs market strong despite international trade tensions

The dollar was steady overnight after jumping on Friday amid evidence of accelerating wage growth which renewed expectations of two more rate hikes from the Fed this year. Whilst the US labour market has been tightening for some time, wage growth has been slow to pick up. Friday’s figures showed that wages grew at the fastest rate in 9 years in August indicating that there is little slack left in the labour market.

Brexit deal closer?

Brexit and GDP data will grab investor attention on Monday. News over the weekend that the EU is ready to give EU Chief Negotiator Michel Barnier mandate to close a Brexit deal is expected to boost optimism that a Brexit deal could still happen before the October deadline. This would be some well needed good news for PM Theresa May who is under heavy pressure from the hard-line Brexiteers in her party and particularly from ex-Foreign Secretary Boris Johnson who launched a scathing attack on Theresa May & her Brexit plans, over the weekend. The pound was marginally lower versus the dollar overnight but inched higher versus the euro.

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The information and comments provided herein under no circumstances are to be considered an offer or solicitation to invest and nothing herein should be construed as investment advice. The information provided is believed to be accurate at the date the information is produced. CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. Please note that 79 % of our retail investor accounts lose money when trading CFDs. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing money.

17-7-2019

UK CPI seen steady despite higher wages
It happened again.US President Donald Trump spoiled the expectations of a US – China trade deal yet again, after he said he could impose more tariffs on Chinese goods, claiming that Beijing pledged but didn’t increase purchases of US farm products following th… Read more

16-7-2019

Nasdaq hits record, eyes on US earnings
Both stocks and bonds extend rally in the US, as the earnings season kicks off.Monday was Nasdaq’s turn to hit a record high, as technology stocks led gains in the US session. The S&P500 consolidated near its historical high as well, though energy (-0.93%)… Read more

15-7-2019

US earnings in focus, as China slows
The week started with undecided risk sentiment on mixed Chinese data.Chinese equities began the week on a negative note, after the data showed that China’s GDP grew 1.6% in the second quarter, a touch better than 1.5% penciled in by analysts and up from 1.4% p… Read more

12-7-2019

Dow at record, oil up on Hurricane Barry
The US stocks went to the moon and back as the Federal Reserve (Fed) Governor Jerome Powell strongly hinted that an interest rate cut is imminent at his semiannual testimony before the congress. The global economic slowdown outweighs the good data in the US, a… Read more

11-7-2019

Powell spurs bets of 50bp cut in July
The US dollar gave back gains on a sharp move after the Federal Reserve (Fed) Governor Jerome Powell has been very clear that the global economic slowdown outweighs the encouraging data in the US at his speech before the congress on Wednesday. Powell’s testimo… Read more

10-7-2019

UK won’t suspend Parliament, GBP down
The US dollar consolidates gains as Federal Reserve (Fed) Governor Jerome Powell prepares to deliver his semiannual testimony before the House Financial Community at 10am today and he is expected to keep the possibility of an interest rate cut on the table des… Read more

9-7-2019

Stocks fall ahead of Powell’s testimony
Markets trade on a mixed risk sentiment.The US dollar extended gains against most G10 currencies, as investors scaled down their dovish Federal Reserve (Fed) expectations following a solid US jobs report in June. The US equities edged lower and the futures ext… Read more

8-7-2019

USD jumps on solid jobs data, lira falls
The US dollar rallied and the 10-year yield jumped to 2.0390%, as the solid US jobs report released the dovish pressure on the Federal Reserve (Fed) on Friday. Data showed that the US economy added 224’000 nonfarm jobs in June, well above the 160’000 expected … Read more
CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 76% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.