Risk Sentiment Dealt a blow as Trump Strikes again

The previous sense of market euphoria created by the U.S.-China trade truce news last weekend now risks being completely overshadowed by a range of Tweets fired by President Trump yesterday on his social feed.
Lukman Otunuga

Open your FXTM account today

The previous sense of market euphoria created by the U.S.-China trade truce news last weekend now risks being completely overshadowed by a range of Tweets fired by President Trump yesterday on his social feed.

This has encouraged uncertainty to emerge over the conviction from the U.S. administration over the trade truce and whether a resolution to this long-standing issue will be found. Confusion and uncertainty over what is happening coupled with renewed concerns about the likelihood of slowing global growth have switched the market sentiment creating a poor mood for stocks. Investors are becoming increasingly doubtful over Washington and Beijing securing a deal within the 90-day window, given the sheer lack of detail and conflicting accounts over what both sides actually agreed on.

The tremors created from President Trump’s Twitter outbursts continue to illustrate how financial markets remain extremely sensitive to trade-related newsflow. With Trump warning China via Twitter and stating that America is going to have a “real deal” or “no deal at all” just days after talks, one can’t help but feel a sense of déjà vu that Trump is going to return to his public hard-line stance. Although the Trump Administration has repeatedly blamed the Federal Reserve’s monetary policy tightening for the unfavorable investor mood in stocks, the key culprit behind the selloff witnessed yesterday was clearly the comment made by Trump on trade with China.

Market players who were cautiously optimistic over trade tensions easing are losing patience and this continues to be reflected across global equity markets. Asia closed mostly lower this morning following steep losses on Wall Street overnight. The negative sentiment from Asia has already infected European markets and is seen trickling back down to Wall Street this afternoon.

Sterling braces for another rough session

Investors with an interest in the Pound should securely fasten their seatbelts and safety helmets for a volatile ride ahead of the Parliamentary vote on Brexit next week.

The British Pound was an easy target for sellers yesterday after Theresa May’s government was found in contempt of Parliament for refusing to release key Brexit papers. May’s triple defeats in Parliament are highly discouraging and may intensify fears over her Brexit deal being rejected next week. With every day in the political arena shaping up to be a terrible day for Theresa May, this is poised to weigh heavily on the British Pound.

In regards to the technical picture, the GBPUSD fulfils the prerequisites of a bearish trend on the weekly charts as there have been consistently lower lows and lower highs. A solid breakdown and weekly close under 1.2700 should instill bears with enough inspiration to target 1.2590.

Will the OPEC meeting push oil prices higher?

The past few trading weeks have been quite rough for Oil prices amid supply and demand side factors. With Oil finding comfort at such depressed levels, expectations remain elevated over OPEC+ cutting production by roughly over one million barrels per day in an effort to stabilize markets. While a production cut from OPEC+ is seen pushing Oil prices higher in the near term, the medium- to long-term impact remains open to question. Rising production from U.S. Shale, lingering fears of global oversupply and threat of slowing growth hitting demand remain core themes that will continue weighing on Oil markets.

The near-term outlook for WTI Oil will depend on the outcome of tomorrows OPEC meeting. A production cut in line with market expectations is seen pushing WTI Oil back towards $55. Alternatively, if OPEC decides to leave production unchanged, prices are seen sinking back towards $50 as investors exploit oversupply fears to attack.

Disclaimer: The content in this article comprises personal opinions and should not be construed as containing personal and/or other investment advice and/or an offer of and/or solicitation for any transactions in financial instruments and/or a guarantee and/or prediction of future performance. ForexTime (FXTM), its affiliates, agents, directors, officers or employees do not guarantee the accuracy, validity, timeliness or completeness, of any information or data made available and assume no liability as to any loss arising from any investment based on the same.

Don't miss a thing!

Discover what's moving the markets. Sign up for a daily update delivered to your inbox

Latest Articles

See All

Expand Your Knowledge

See All
IMPORTANT DISCLAIMERS
The content provided on the website includes general news and publications, our personal analysis and opinions, and contents provided by third parties, which are intended for educational and research purposes only. It does not constitute, and should not be read as, any recommendation or advice to take any action whatsoever, including to make any investment or buy any product. When making any financial decision, you should perform your own due diligence checks, apply your own discretion and consult your competent advisors. The content of the website is not personally directed to you, and we does not take into account your financial situation or needs.The information contained in this website is not necessarily provided in real-time nor is it necessarily accurate. Prices provided herein may be provided by market makers and not by exchanges.Any trading or other financial decision you make shall be at your full responsibility, and you must not rely on any information provided through the website. FX Empire does not provide any warranty regarding any of the information contained in the website, and shall bear no responsibility for any trading losses you might incur as a result of using any information contained in the website.The website may include advertisements and other promotional contents, and FX Empire may receive compensation from third parties in connection with the content. FX Empire does not endorse any third party or recommends using any third party's services, and does not assume responsibility for your use of any such third party's website or services.FX Empire and its employees, officers, subsidiaries and associates, are not liable nor shall they be held liable for any loss or damage resulting from your use of the website or reliance on the information provided on this website.
RISK DISCLAIMER
This website includes information about cryptocurrencies, contracts for difference (CFDs) and other financial instruments, and about brokers, exchanges and other entities trading in such instruments. Both cryptocurrencies and CFDs are complex instruments and come with a high risk of losing money. You should carefully consider whether you understand how these instruments work and whether you can afford to take the high risk of losing your money.FX Empire encourages you to perform your own research before making any investment decision, and to avoid investing in any financial instrument which you do not fully understand how it works and what are the risks involved.
FOLLOW US