1. Markets Dance To The Beat Of The Trade War Drums
European stocks opened higher Friday morning, investors however are seen keeping a cautious stance, after the U.S. hiked duties on $200 billion of Chinese products. Beijing said it would strike back, as the two sides prepare for a last round talks to try salvaging a trade deal. Chinese shares strengthened on Friday on hopes that Beijing and Washington might still be able to avert a trade deal collapse in their upcoming talks. Investor confidence remains highly fragile however and we see mixed patterns as market participants oscillate between optimism and a risk off mood.*
2. What’s Happening to Oil Prices Today?
Oil prices fluctuated wildly this morning on the latest US/China trade talk developments. Prices had risen more than 1% after U.S. Trump said he received a “beautiful letter” from Chinese President Xi. Oil prices proceeded to dive after the US proceeded with tariffs, but then recovered somewhat on optimism that the US/China trade talks may help salvage the situation. Oil prices along with most risk assets will be moving almost in sync to trade tariff updates today.**
3. Today’s Key Market Releases
Any developments on the US-China trade saga will be today’s main driving factor. However, we will see some key releases including UK GDP at 11:30 GMT and US CPI and Canada labour market data at 15:30 GMT. The US CPI has a good chance of weakening the USD further today giving a boost to US stock markets as it increases the dovish pressure on the US central bank (Federal Reserve).***
4. Forex Preview: USD Holds its Breath
The EUR/USD held on its gains, rising above the key $1.12 despite the fresh US tariffs but is currently lacking clear direction. The USD is trading mostly flat today as investors hold their breath for any news on the US/China trade front. The USD/JPY is now trading below 110.**
5. Will Gold Finally Break Above $1290?
Gold prices edged slightly higher on Friday, drawing support from increased trade tensions, putting the bullion back on track for a weekly gain. Spot gold was last seen trading flat as it seems to have a tendency to want to break above the $1,290, something that it has failed to do in recent days.***
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*CNBC May 10, 2019 2:48 AM ET
**Reuters May 10, 2019 3:53 AM ET
***FXStreet May 10, 2019 03:07 AM ET