US-China trade relations remain significantly strained, with hopes of a phase one deal fading on Trump’s claim that we may have to wait another year. Meanwhile, the FTSE 100 is underpeforming after the pound rose in the wake of a stronger construction PMI.   

  • Risk assets hit as Trump warns that the US-China trade war could go on for another year
  • US-EU relationship under duress as Trump threatens to hit French goods
  • FTSE 100 hit hard, as risk-off sentiment is accompanied by a rising pound

Global risk assets have taken a hit today, with trade war developments hitting a triple-whammy of bad news. US-China relations have certainly come into question of late, with the US passing of a Hong Kong bill certainly hurting relations and denting hopes of a trade breakthrough. The worry for traders is that it seems talks are largely non-existent at the moment, with Trump claiming that they may hold off until after the US election a year from now. With Trump likely to desire a big boost to growth ahead of those election, it is likely he is bluffing, yet the likely move to impose further tariffs in two-weeks’ time does highlight a breakdown in talks.

Elsewhere, we are seeing signs that the US-EU trade spat could open up into a similar tit-for-tat scenario after France threatened EU-wide retaliation in response to US plans to place tariffs on a number of French goods. With the likes of France and the UK (under a possible Corbyn government) threatening to ramp up tax on US tech firms, there is a high likeliness that we will continue to see unease between the US and EU for as long as Trump is in power. 

With all this destruction throughout global equities, it comes as no surprise to see havens such as gold and then yen outperform as traders seek their relative safety. The FTSE 100 has been the biggest underperformer in Europe, with the pound’s resurgence hindering any hopes of stability throughout the day. A rise in the UK construction PMI helped build on yesterday’s manufacturing jump, yet worries remain for businesses in the UK as Corbyn closes the gap on Johnson in the polls. 

This information has been prepared by IG, a trading name of IG Markets Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients.

Analysis feed

Latest Forex Analysis

Editors’ Picks

GBP/USD off 7-month highs, still firmer as Tories hold the lead

GBP/USD retraces from the new seven-month highs of 1.3180 but remains strongly bid, as weekend polls have reaffirmed a solid lead for PM Johnson's Conservatives. Cable dropped on Friday amid upbeat US data.


EUR/USD steadying above 1.1050 amid upbeat German export data

EUR/USD is trading above 1.1050, attempting a recovery after Germany reported an increase in exports in October. EUR/UDS dropped sharply on Friday amid upbeat US Non-Farm Payrolls and weak German industrial output. 


Forex Today: US-Sino trade tensions prevail, Boris closer to victory, EUR/USD licking its wounds

Trade talks: President Donald Trump has called on the World Bank to stop lending to China, a move that may aggravate tensions, with only six days to go until Washington is set to slap new tariffs on Beijing. Negotiations continue.

Read more

Gold clings to modest gains above $1460 level, lacks follow-through

The latest NFP report surpassed most optimistic estimates, which provided a goodish intraday lift to the US dollar and eventually prompted some aggressive selling around the dollar-denominated commodity.

Gold News

USD/JPY in search of a firm direction, stuck in a range above mid-108.00s

USD/JPY was seen oscillating in a narrow band and consolidated last week’s losses. US-China trade uncertainties continued underpinning the JPY’s safe-haven status. Investors now seemed reluctant ahead of the latest FOMC monetary policy update.


Forex Majors