Weekly Fundamental Forecast: A Week Ending Trade War Salvo Leaves Distinct Unease for Next Week's Trading
Sentiment was just starting to find its balance this past week when another US-China trade war headline involving the US President hit the wires. Will this theme return to prominence next week or will we fall back on scheduled event risk?
The US Dollar backtracked last week but a durable upshift in Fed interest rate hike expectations and the threat of renewed risk aversion may put it back on the offensive.
The European Central Bank is sticking to its preset policy course as uncertainty around its inflation forecasts is receding, but with Italy back in the news, any goodwill injected into the Euro from the recent policy decision will likely be neutralized.
Brent crude oil traded to the highest levels since May breaching $80/bbl, up nearly $10/bbl since the August low showing that price may move higher in line with longer-term fundamentals.
Gold continues to act out of character, trading lower when risks arise and higher when markets climb. Retail positions are net-long, so gold may fall further.
The Australian Dollar has swooned this year despite a strong domestic economic performance. Its fall may pause into this week but it’s probably not over
The USD/CNH approaches 6.9, a key threshold once again; whether it can hold or break may be determined by the progress of resumed trade talks as well as the outlook of China’s economy.
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