The tariff spat between the US and China is heating up, with the US intending to impose further tariffs on China after the Chinese quickly responded last week with their own targeted tariffs after the US’ initial raft of $50 billion in tariffs. With the U.S recently slapping tariffs on the EU, Mexico and Canada, it is no wonder that investor anxiety has risen, and risk flows been put in a defensive stance early in the week.
A quiet European macroeconomic calendar is expected today, as the second-liner Eurozone current account and construction output will be eyed in absence of the first-tier releases. Also, in focus will remain the speeches by the global central bankers, as the European Central Bank’s (ECB) two-day Forum on central banking commences today in Sintra, Portugal. Bears may hit the market with fresh offers if the ECB President Mario Draghi repeats the dovish end of the central bank’s QE program.
USD/JPY fell to an eight-day low of 109.85 in Asia, possibly due to fast-moving US-China trade war and the signs of risk aversion in the financial markets. The JPY picked up a strong bid in early Asia, pushing the USD/JPY below its 200-day MA of 110.22 after Trump asked the US Treasury to identify $200 billion worth of Chinese goods for additional tariffs at a rate of 10 percent.
The GBP/USD is managing to catch some lift ahead of the London market session for Tuesday, rising into 1.3270 in the Asian markets. The GBP has been sticking close to lows near 1.3230 in Monday’s trading, with confidence in the Sterling remaining muted. Tuesday sees little action on the Sterling side of things, and overall market sentiment can be expected to remain in the driver’s seat.
Crude oil prices have recovered after Friday’s dramatic plunge as markets position for this week’s much-anticipated OPEC+ meeting. As for today, the weekly set of API inventory flow statistics headline as the outcome will affect the oil prices.
Gold prices may rise as US-China trade spat sinks bond yields. Gold is trading sideways in the Asia session, currently at 1,282.70. It’s a quiet start to the week, with no major releases out of the U.S. On Tuesday, the focus is on construction numbers, with the release building permits and housing starts.