Global markets recovered on Tuesday as investors were optimistic about a sign of relief in the U.S.-China trade tensions surrounding Chinese telecommunications giant Huawei. Specifically, US officials said they would grant 90-day reprieve from penalties to Huawei and its subsidiaries.
It is also important to note however, that Google announced that it will stop its Android mobile operating system support for Huawei phones following suit with the US blacklisting of Huawei. This could further intensify the escalation between China and the US and today’s stock market recovery may be short lived. China could be set to retaliate in ways of restricting or hugely pushing prices for rare earths for example, and generally it seems the stand-off between the two superpowers is about to intensify.
EU Markets Open Higher
EU markets rebounded Tuesday after the U.S. government temporarily eased trade restrictions on Huawei. The DAX will remain under pressure as Europe is looking to face troubles from both the US directly and the US-China trade war having a negative effect.
Investors will be closely monitoring escalating geopolitical tensions tensions today, and specifically on the US/Iran front. President Donald Trump warned Monday that Iran would be met with “great force” if it attacked U.S. interests in the Middle East. Any developments on the Brexit front are also expected to impact today’s markets.
Forex Preview: Is there an End to the Dollar Run?
The dollar continued to appreciate this morning to reign at a two-and-a-half-week peak on higher yields. The USD will be gaining further if the US appears to have the upper hand on its trade clash with China. Elsewhere, the Aussie slipped on disappointing RBA Minutes, with further bearish momentum ahead due to the expected rate cut in 2 weeks’ time. The EUR also lost further ground and was last seen trading around yesterday's lows of 1.1150.
Oil Prices Slightly Higher, Gold Dips
Oil prices continued to edge slightly higher on Tuesday morning on escalating tensions between the United States and Iran and on signs that producer club OPEC will continue to monitor supply this year. However, Crude oil failed to break above the key $64 level despite the intensifying tensions between the US and Iran.
Elsewhere, spot gold remained subdued as the dollar strengthened and as risk appetite increased. XAU/USD was last seen stuck at the 200-day EMA.
Bitcoin Flirts with 8K Range Once Again
BTC corrected the weekend's strong move to the upside to some extent trading firmly above the $7,700 but has not yet been able to crack the $8,000 on any attempt. BTC/USD was last seen trading at $7951.7, up 0.85% as of 8:10 GMT this morning.
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