1. Gold Set to Test $1500 Level Amid Safe Haven Rally
Gold prices touched more than a six-year high on Wednesday, as the trade war between China and the United States showed no signs of abating. The safe-haven metal remains the big winner of this crisis having traded up to almost $1,500 and is now holding slightly below that next psychological big mark. The Sino/US trade war is still raging on with China pushing its currency lower past the psychologically important line of seven per dollar, which immediately prompted Washington to label Beijing a currency manipulator.*
2. Markets Take a Breath
The rebound in stock markets in the US yesterday following the PBoC statements that its currency won’t fall drastically further brought some risk appetite back to the table today; however, Asian markets already showed further signs of risk averseness and safe-havens continued to see buying interest. EU bourses also edged higher this morning, but earnings were capped as investors kept a close watch on the Chinese yuan amid escalating U.S.-China trade tensions. The Calendar is thin today, therefore, the macro stories will have the most impact on market direction, which will most likely be to the downside as risk-off flows continue.**
3. USD Stabilizes After Steep Drop
The dollar has stabilised this morning after recording steep losses yesterday, as the probability for the next cut to be a 50bps went to 50%. The belief that the Federal Reserve would accommodate the US in its standoff with China was later crushed by Fed’s Bullard who made it clear that the Fed cannot and will not be part of a tit-for-tat trade war between the US and China. The EUR/USD is currently resting just below $1.12 after its push up early in the week waiting for new impulses in the trade war saga, while German Industrial Production data out of Europe this morning was quite weak and could not help the pair further up.**
4. NZD Freefalls After RBNZ 0.5% Rate Cut
Elsewhere the NZD plummeted more than 2% against the EUR and USD this morning at 7:00 GMT after the RBNZ eased rates as expected but with a very dovish statement. The RBNZ key interest rate was slashed by 0.5% instead of the 0.25% consensus, while the central bank also signalled it may reduce rates even into negative territory if needed.***
5. Oil Prices Dip
Oil prices were last seen trading flat after recording more losses in the previous session amid broader risk-off flows and global trade concerns. Today’s US crude oil stocks data at 14:30 GMT should be closely watched for clues on future direction.****
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Sources:
*FXStreet Aug 7, 2019 03:07 AM ET
**Reuters Aug 7, 2019 3:53 AM ET
***CNBC Aug 7, 2019 2:48 AM ET
****Investing Aug 7, 2019 05:20 AM ET
