Which economy is stronger?
Donald Trump boasted over twitter that the US economy is strong and that China will have its first recession or worse in years if they do not make a deal with the US, he also offered to help resolve the “Hong Kong” problem in a “humane” manner. Editor-in-chief of the Chinese Global Times (a tabloid run by China's ruling Communist Party), Hu Xijin, responded that the U.S. president "hasn't linked trade talks with the Hong Kong problem” and that it wouldn’t solve anything even if he did, he also wrote of a politically unified China that is prepared for a prolonged war.
This makes it clear that both sides are very much insisting on their own views only and that could mean that we have not seen the worst of this trade war yet, which makes me being rather on the bearish side of expectations for stock markets than a buyer of dips.
Global Markets Edge Higher
European markets opened in the green on Friday with the possibility of heading higher later in the day as investors monitor Treasury yields for clues on a possible recession. US retail sales came in well yesterday helping US stock markets push higher. Today's Michigan sentiment may help further speed up the recovery. Also, we have options maturing today on the NY cut which may influence positioning more than on a usual Friday.
Forex Preview: USD Slightly Higher
Meanwhile, the dollar also held strong after some better-than-expected U.S. retail sales data and on statements from the Fed that there is no need for any inter-meeting action, meaning nothing will happen before the next fed meeting. Elsewhere, the EUR dipped to 1.11 and may be in for a further decline to the recent July lows.
Gold Prices Dip, Oil Prices Recover
Meanwhile, safe-havens and specifically gold prices edged lower on Friday as risk appetite temporarily returned to the table. Gold prices are still holding above the $1500 mark and appears to still have a long way up to go as global tensions rage on. Meanwhile, oil prices rose on Friday following two days of declines, buoyed by a set of solid U.S data. Long-term, I would expect oil prices to edge lower as a strong dollar and diminishing demand continue to put pressure on crude and brent.
Bitcoin Steady After Steep Plunge
BTC: retraced well yesterday and closed above the 10k but lost that momentum quickly this morning and is back below 10k in danger of retesting yesterday's low which also confluences with the 100-day EMA.
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