Perfect storm for Trump

We're seeing a far more cautious tone at the end of the week as deteriorating relations between the US and China weigh on sentiment.

Trump is due to hold a press conference on China today, which will likely involve laying out the country's response to the National People's Congress passing of the controverial security bill legislation. There's a wide range of ways the US could respond which is what's making people nervous, especially as it's likely to lead to another tit-for-tat spar between the two countries.

This is turning into a nightmare election year for the President. Everything was going so well heading into the new year and now with only five months until the election, he's facing a global pandemic that's claimed more than 100,000 US lives, a severe recession, another fight with China and riots in Minneapolis following the killing of George Floyd by police officers. Not the backdrop he had in mind six months ago.

There's a batch of data flowing out throughout the day today but, let's face it, under the circumstances, it's like to pass under the radar. Not that it's been hugely impactful anyway in recent months, with investors willing to look past the ugly numbers in favour of brightening post-pandemic prospects.

Jerome Powell will also make a virtual appearance where future monetary policy action will likely be discussed. Negative rates may not be on the agenda yet but the Fed has shown extremely well that there's plenty of other, far more effective, tools at their disposal.

Oil stalling after immense rally

The oil price recovery has well and truly stalled, with WTI and Brent off a few percent today, after EIA reported another large inventory build on Wednesday. This comes as market sentiment turns south on souring US-China relations. It's been some recovery for crude prices so a period of profit taking can only be healthy. With economies gradually reopening, there's plenty more time for upside, assuming it all goes to plan of course. Huge risks remain but the early signs are encouraging.

Gold's cautious rally

Gold is up half a percent in early Friday trade, buoyed by a slight softening of the dollar as it continues to bounce of key $1,700 support. I don't think anyone is getting carried away just yet, any rally feels like a monumental effort at the moment and even when breakouts occur, there seems plenty of sellers willing to come in and fade the move. We may see more of this in the coming sessions.

Bitcoin looking less vulnerable

Bitcoin has broken back, and held, above $9,000, although it is coming under a little pressure today. That will come as a relief at a time when it was starting to look a little vulnerable. Post-halving consolidation will be perfectly acceptable, as long as the pre-halving gains aren't wiped out, which could happen in the event of a break below $8,000.