1. USD and Stock Markets Edge Higher as Trump Takes Back Mexico Tariffs
Stocks in Asia traded higher on Monday morning after the release of China’s trade data for May, which revealed that the country’s exports beat forecasts. European markets also started the day on a bullish note this morning as risk returned to the table after U.S. President Donald Trump announced that proposed tariffs on Mexican imports would be suspended indefinitely. The US and Mexico came to an agreement and the tariffs against Mexican goods were averted in the 11th hour giving risk markets and the USD a boost at the start of this week.*
2. Forex Preview: Dollar Higher, EUR Corrects
The dollar came off its Friday’s lows after a disappointing NFP report with the DXY rising 0.36% to 96.90 as of 8:10 GMT this morning after ending with a 1.2% loss last week, its worst weekly performance in 4 months. Elsewhere, the yuan dropped after Chinese economic data came in mixed overnight, putting more pressure on the global outlook for growth and trade. The EUR corrected from recent highs on Monday, confirming a bearish pattern as the price dropped below the 1.13 key level as of 8:10 GMT, which means that the EUR may experience further selling pressure.**
3. Macron Warns Boris
In the UK, former UK Foreign Minister Boris Johnson suggested to halt the Brexit divorce payments to the EU which got an immediate response by French President Macron who warned that this would lead to a downgrade of the UK and overall turmoil. The GBP has traded lower on the news and is now awaiting key data GDP data this morning which could push it back below the 1.27 handle.***
4. Oil Prices Recover
Oil prices recovered on the risk-off mood fading away after the Mexico-US agreement, but one should also consider that Mario Draghi actually mentioned Germany’s economy as an area of concern which could be another piece to the puzzle of global oil demand contracting and not helping to prop up oil prices. What is more, Saudi Arabia said OPEC and Russia will keep supplies limited, and in relief that the United States and Mexico averted a trade war that would have damaged the global economy.****
5. Gold Retreats
Gold prices retreated from a 14-month peak on Monday after the United States postponed tariffs on Mexico indefinitely and averted a trade war crimping safe-haven demand for the yellow metal. The dollar-denominated metal was also subdued by a rising greenback. If gold prices hold above the $1327 level there is a compelling case of another push to the upside on the next round of risk-off flaring up, which seems plausible given the rise of tensions between China and the US.*****
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Sources:
*CNBC Jun 10, 2019 2:48 AM ET
**Reuters Jun 10, 2019 3:53 AM ET
***FXStreet Jun 10, 2019 03:07 AM ET
****Bloomberg Jun 10, 2019 06:13 AM ET
*** Investing Jun 10, 2019 08:54 AM ET
