A Tentative Trade Truce Supports the Markets [Video]

The markets’ focus is largely attuned to global trade developments today after the US and China agreed on a truce to halt the next round of U.S. tariffs on an additional $300 billion of Chinese goods. The optimistic sentiment ahead of Trump Xi meeting at the G20 summit this weekend pushed global bourses higher with major EU indices opening in the green.

Trump Would Trade Powell for Draghi

President Donald Trump seems unwilling to let go of his grudge against Fed heads and took another aim on Federal Reserve Chairman Jerome Powell yesterday, claiming he "made" Powell but would now like to trade him in for Mario Draghi, the head of the European Central Bank. Before last week's meeting, Trump had pressured the Federal Reserve to begin cutting rates immediately and suggested that he might demote Powell as chairman if the Fed didn't follow his advice. In his interview with Fox Business Network, Trump insisted he had the right to demote Powell or even fire him, something which legal experts dispute. We would now wait for the next Fed monetary meeting at the end of July to see whether Powell is willing to yield to Trump’s wishes for more easing. 

Hunt VS Johnson

The fighting in the UK between Remainers and Brexiteers remained heated with any outcome still possible at the moment keeping the GBP exchange rate in check. Meanwhile, the final stage of the Conservative leadership election is under way with Boris Johnson facing off Jeremy Hunt. The two will compete in a series of hustings across the country, after which Conservative party members will pick which one of them will be the next UK Prime Minister.

Forex Preview: USD Remains Supported

The dollar was supported by the tentative US/China trade truce today, yet it is still trading mainly within confined ranges. Elsewhere, EUR dips are picked up by buyers at the 200-day SMA level on the last 3 days' daily lows. GBP remained glued to the 1.27 level awaiting the next impulse, which might likely come from the USD complex rather than from the GBP itself which is struggling on the continued infight in the UK. The AUD also added significantly against the safe haven JPY to reach a two-week high of 75.59 as of 8:00 GMT this morning. On today’s agenda, the US GDP due at 12:30, will give traders more direction on the USD. 

Oil Prices Correct But More Gains May be Coming

Oil prices corrected today, after noting very strong gains in the previous session after data revealed that inventories had their biggest draw in a very long time (coincidence?). The draw propped up prices extending the uptrend which is further supported by the continued tension between Iran and the US. Market participants will now be eyeing a meeting of OPEC and other oil producers to decide on an extension of output cuts this coming Monday, Jul 1st. 

Gold Prices Retreat, Bitcoin Wobbles

Gold is losing steam after having touched a 6-year high and ahead of the G20 summit. It seems that we will have to wait for the G20 summit to play out this weekend, before gold prices can see new meaningful input. Elsewhere, bitcoin pushed further higher on its enormous bull-run after dropping around $2,000 USD within 15 minutes last night on an outage of Coinbase. Presently BTC is back at the $12,200 range and may reattempt an attack on the 13k level shortly.