US stocks closed marginally lower on Tuesday, failing to climb through resistance after posting strong gains on Monday. Shares in Asia Pacific are also headed for a bearish close while in Europe bourses started the day lower after the U.S. and China resumed tough stances in their ongoing trade war.
A Rate Cut or a Rate Hike?
Generally, it seems the Fed is the main topic all around these days and the tiniest amount of expectation that the Fed may cut rates pushes stock markets upwards, but for how long? It seems the Fed is not planning to lower rates very soon, despite Twitter rants of the POTUS.
New Clashes on the Trade War Front
Chinese countermeasures against the US seem to be in the making as per the Global Times editor which tells us this trade war is anything but even close to a deal. Yesterday, U.S. President Donald Trump defended the use of tariffs as part of his trade strategy, while China vowed a tough response if Washington insists on escalating trade tensions. It is not even clear if Trump will meet Xi on the G20 summit, despite Trump threatening to up tariffs on China’s imports if Xi does not attend.
Dollar Weakens
The dollar hovered near 11-week low on Fed rate cut bets, with the DXY tumbling to 96.62 this morning. A weaker dollar and the risk off mood caused investors to turn to safe haven currencies on Wednesday. The Japanese yen saw some gains. Meanwhile, the EUR is extending its climb moderately awaiting more input from a Mario Draghi speech this morning. The sterling is also gaining some support from USD weakness but remains rather muted.
Oil Prices Tumble
Oil prices dropped almost 2% on Wednesday, despite a weaker dollar as they were weighed down by a diminishing oil demand outlook and a rise in U.S. crude inventories. Specifically, the U.S. Energy Information Administration cut its forecasts for 2019 world oil demand growth in a monthly report released on Tuesday.
Gold Recovers, BTC Nears $8K
Spot gold saw some considerable gains on the back of a weaker greenback with the noble metal climbing above $1335 this morning. Renewed concerns over U.S.-China trade war, also increased the appeal of safe-haven bullion. Elsewhere, bitcoin remained below the 8k handle but is currently very close to breaking the key resistance level suggesting another attempt in due time.
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EUR/USD clings to daily gains above 1.0650
EUR/USD gained traction and turned positive on the day above 1.0650. The improvement seen in risk mood following the earlier flight to safety weighs on the US Dollar ahead of the weekend and helps the pair push higher.
GBP/USD recovers toward 1.2450 after UK Retail Sales data
GBP/USD reversed its direction and advanced to the 1.2450 area after touching a fresh multi-month low below 1.2400 in the Asian session. The positive shift seen in risk mood on easing fears over a deepening Iran-Israel conflict supports the pair.
Gold holds steady at around $2,380 following earlier spike
Gold stabilized near $2,380 after spiking above $2,400 with the immediate reaction to reports of Israel striking Iran. Meanwhile, the pullback seen in the US Treasury bond yields helps XAU/USD hold its ground.
Bitcoin Weekly Forecast: BTC post-halving rally could be partially priced in Premium
Bitcoin price shows no signs of directional bias while it holds above $60,000. The fourth BTC halving is partially priced in, according to Deutsche Bank’s research.
Week ahead – US GDP and BoJ decision on top of next week’s agenda
US GDP, core PCE and PMIs the next tests for the Dollar. Investors await BoJ for guidance about next rate hike. EU and UK PMIs, as well as Australian CPIs also on tap.