1. Markets React to New Round of Tariffs
Overnight the additional US tariffs on Chinese goods went into effect pushing markets mildly lower in Asia. The bearish trend did not last, however, with EU bourses opening higher as market participants are still betting on talks between the U.S. and China resuming. The US began imposing 15% tariffs on a variety of Chinese goods on Sunday as China also imposed new duties on U.S. crude, in the latest escalation of a simmering trade war. US markets will remain closed today for Labour day, so the markets are likely to remain impartial to the fresh round of tariffs at least for today.
2. Forex Preview: EUR Drops to Multi-Year Low
The USD is coming a little off its highs from Friday but still remains quite robust and ready to resume with further strength. Elsewhere, the EUR: dropped to a multi-year low on weaker EU economic data and political instability concerns and may see further selling pressure later in the day. The GBP is also holding for the moment and trading a little higher from its Friday lows despite the escalation in the Brexit front which could push the sterling lower any time now.
3. Brexit Boiling Up
The situation in the UK is heating up in the U.K. after Prime Minister Boris Johnson’s decision to suspend Parliament next month brought a fresh wave of consternation and confusion to Britain’s already chaotic efforts to leave the European Union. His opponents have sworn to remove any possibility of leaving without a deal, but PM Johnson seems to be feeling the pressure as he also issued an ultimatum to Tory rebels that they would be expelled from the party if they joined forces with Corbyn to halt a no-deal Brexit.
4. Full Calendar Ahead
We are in for an eventful week data-wise with key interest rate decisions from RBA and BOC and a Friday NFP report to guide markets. RBA is expected to keep rates on hold, while BOC is set to remain dovish. Meanwhile, market participants will also focus on the newly imposed tariffs on China and any developments to the HK, Brexit and global trade front.
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5. Oil Lower, Gold Sees Fresh Wave of Demand
Oil prices lost heavily on USD strength after new tariffs imposed by the United States and China came into force, raising concerns about a further hit to global growth and demand for crude. Elsewhere, spot gold enjoyed a fresh wave of demand with XAU/USD currently holding at its support and having good chances to advance higher from the current price level.
6. Bitcoin Aims for $10K Yet Again
BTC managed to reclaim the 100-day MA again after a very uneventful weekend and now needs to retackle the 10k to stop the immediate bearish pressure. Last week, serious security vulnerabilities were discovered on the bitcoin Lightning Network, which could result in users losing their bitcoin if nodes are not upgraded. The news brought heavy selling pressure on the cryptocurrency which now attempts to reclaim its $10K mark.
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Sources:
*Financial Times Sept 2, 2019 03:07 AM ET
**Reuters Sept 2, 2019 3:53 AM ET
***CNBC Sept 2, 2019 2:48 AM ET
****Investing Sept 2, 2019 05:20 AM ET
*****Bloomberg Sept 2, 2019 05:20 AM ET
