After being stuck in trade war purgatory and starved of positive news of late, any glimmer of optimism or agreement on practically anything on the trade war front is viewed favourably. However, with your average investors so emotionally involved in the trade war outcome, are their judgments clouded by those emotions?
Financial markets are starved for a bit of good news. China said it would hold trade talks by phone in two weeks, and the US saying it will delay some of the tariffs, has driven a wave of profit-taking across safe-haven assets. But the tariffs are not being delayed because President Trump has turned "Mr Nice Guy" it’s because big business has told the Whitehouse categorically there aren't any alternative supplies.

And while some investors are relishing in this news, it’s a clear cut reminder of what happens when the Whitehouse starts messing around with global supply chains and suggests a trade policy that is constructed more on what amount of spaghetti sticks to the wall rather than any strategic game plan.
But with the USTR creating a so-called " exempt list" they have signalled that a 10 % round of tariffs is going ahead on just about all but 50 billion of items that US big business can't source elsewhere. And as far as the negotiations are concerned, have things become so tense that the September round is now on the telephone, rather than in-person??
Somehow, I don't feel as comfortable as the 2 % rally on the S&P.
The risk rally saw the most crowed trades take the biggest hit, long gold and short USDJPY But USDJPY ran out of steam towards 107.00 and gold found a solid a base below $1490. After the headline rinse, it's probably time to repeat.
I was going to write about the stellar US CPI prints but looking at the bond curve reactions the markets is telling the Fed that" the data is irrelevant and if you don't cut you are  making a huge policy mistake."
Oil Markets
Go with the oil flow.
Brent rallied over 5 % on the US-China headline and while  the dynamics of the move can be left open to speculation , what is not however is that oil sentiment is unmistakably  connected to the hip of demand risk and just how quickly it can ameliorate is to the degree which there are any signs of progress on  US-China trade front.  On that regard, a whole lot of gloominess just got power rinsed from the markets on the USTR headlines.
Gold Markets
Geopolitical and related risks including Hong Kong unrest and the ongoing slide in the Argentine peso kept up a robust safe-haven bid in gold touching a 6 year high helped along by falling US bond yields. But then the bulls were dealt a double whammy dose of negatively that saw gold prices melt nearly $50 top to bottom on the session . First, the US core CPI surprised to the upside for the second month and in a row sending bond yields higher. But the stop loss trap door gave way when Office of the US Trade Representative said that the US Administration would delay imposing a 10% tariff on a specific Chinese product. This triggered a robust correction in safe-haven assets as t. Equities jumped, yields rose, and the USD climbed while Gold haven bid virtually evaporated.
Positions were stretched with a lot of new money in play, so the market was very prone to any glint of risk positive news.

Vanguard Market Pte Ltd provides forex, commodities, and global indices analysis, in a timely and accurate fashion on major economic trends, technical analysis, and worldwide events that impact different asset classes and investors.

Our publications are for general information purposes only. It is not investment advice or a solicitation to buy or sell securities.

Opinions are the authors — not necessarily Vanguard Markets Pte Ltd or its officers or directors. Leveraged trading is high risk and not suitable for all. Losses can exceed investments.

Analysis feed

Latest Forex Analysis

Editors’ Picks

GBP/USD: Falling channel breakout on 15-min targets 1.3400

GBP/USD's 15-min chart is reporting a bearish channel breakout, with the bulls aiming to regain the 1.34 handle amid growing Brexit optimism. However, the breakout may be short-lived, as the daily chart is reporting oversold conditions. 


AUD/USD struggles to gather upside traction despite upbeat China data

AUD/USD is struggling to build bullish momentum despite the above-forecast China data. The bullish pressure remains weak, possibly due to the news that China is planning to lower its 2020 GDP target to 6% from the current year's 6.5%. 


USD/JPY bulls cling to trade deal hopes on 109 handle

USD/JPY has opened the week on the backfoot but has stablised above four-hour bullish moving averages, as well as the rising 21-DMA while risk appetite remains elevated. USD/JPY is currently trading at 109.35.


Gold: Flatlined after the biggest weekly gain since September

Gold is lacking a clear directional bias in Asia, having eked out its biggest weekly gain in nearly three months. The yellow metal is currently trading at $1,474 per Oz, representing little or no change on the day.

Gold News

Central Bank Meetings and Flash PMI Reports, but It's Over except for the Shouting

After last week's flurry of events, market activity is set to slow over the next three weeks.  But what a flurry of events it was.  A new NAFTA apparently has been agreed. This week's highlights include the flash PMIs and several central bank meetings.

Read more

Forex Majors