1. Global Markets Plummet as U.S. Escalates Trade War
Positive momentum has faded this morning as the clash between China and the USA intensified; now even including a possible arms race with the US planning to deploy a mid-range missile in the Pacific within months. The US promised to impose fresh tariffs on China last week which will also hurt its own economy. The Fed is now more pressured than ever to slash rates but it seems unwilling to do so. What is more, the Yuan smashed through the margin 7 line which indicates that China has officially started the currency war and is devaluating its currency now strongly as a countermeasure to the US’s threats of new tariffs come September.
2. More Bears Ahead for Stock Markets?
EU bourses started the day lower while US indices futures pointed to an opening decline of more than 250 points for the Dow Jones Industrial Average at today’s open. Risk markets see a further drop and opened lower in Europe and could easily give in to the mounting pressure of risk-off waves. Services numbers out of the EU and the US today are the most important numbers on the calendar that could add to risk-off if they disappoint.
3. Forex Preview: USD Edges Higher After Recording Major Sell-Off
The dollar remained weak but has taken a pause at the moment after recording stark losses on Friday over new reports of slower U.S. employment growth in July and heightened U.S.-China trade tensions which in turn fueled expectations that the Federal Reserve would cut interest rates again in September. The EUR could see further upside on USD weakness. The EUR/USD is currently trading 0.25% higher even if the fresh EU PMIs this morning disappointed. Any new Brexit stories should also be closely watched for direction on the GBP which is currently trading lower against its key rivals. The AUD is losing further on the worsening of the China-US relationships dropping to further multi-year lows. Meanwhile, the NZD also dipped 0.4% against the US dollar as the RBNZ is widely anticipated to slash rates on Wednesday.
4. Gold Spikes
Gold is the clear winner in these uncertain times with XAU/USD having added more than 1% to jump to its highest levels in more than six years today, as the broader risk-off mood drove investors towards safe-haven assets. We would expect to see more upside for gold today.
5. Bitcoin Adds +10%
BTC is trading more than 10% higher and above the daily Ichimoku cloud now at 11,8k, as of 7:50 GMT. We could see further bullish pressure mount up late in the day if the price remains above the cloud.
You can find and trade CFDs on all of the above-mentioned assets on BDSwiss Forex/CFD platforms.
*Financial Times Aug 5, 2019 03:07 AM ET
**Reuters Aug 5, 2019 3:53 AM ET
***CNBC Aug 5, 2019 2:48 AM ET
****Investing Aug 5, 2019 05:20 AM ET
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