Oil extends Gains

Forex today was mainly driven by risk-off flows, as the chances of a full-blown US-Sino trade war increase following reports that the Chinese President Xi called on all the provinces and ministers to prepare for a trade war. As a result, the safe-haven pairs got a boost at the expense of the higher-yielding/ risk currencies.

Amid lack of key economic releases in the Euro-zone today, investor sentiment would be determined by the US advance goods trade balance, pending home sales and durable goods orders, all for May, set to release later in the day.

The USD/JPY is currently trading near the 110.00 handle ahead of the European market session, dropping from the day’s high of 110.20 on continued risk aversion, but recovering from a low of 109.77. Tuesday saw a recovery for the US Dollar against the Yen, but trade fears between the US and China is continuing to hamper risk appetite with USD/JPY struggling to make leeway as the Dollar recovery chugs against souring market sentiment.

The GBP/USD pair is on focus as Wednesday brings a hefty outing from the BoE’s Governor, Mark Carney, who will be speaking at 08:30 GMT when the central bank releases their latest Financial Stability Report. The pair is currently trading steady near 1.3230 after moving downwards in yesterday’s session, driven by comments from the BoE’s Monetary Policy Committee member Jonathan Haskel accusing improper investment spending of being the primary driver behind the UK’s slow productivity growth. The GBP reacted negatively throughout the day, dipping into a low of 1.3190 before recovering at the tail end of the US session.

Crude Oil prices rose to $70.20, after U.S. says all countries should stop Iranian crude imports, while the American Petroleum Institute (API) on Tuesday reported a 9.2-million-barrel reduction in U.S. crude inventories in the week to June 22. OPEC’s decision to raise output last week following a key meeting in Vienna, was widely anticipated, but the supply boost was less than some investors had expected. Today Oil markets anticipates the EIA’s Weekly Crude Oil Stockpiles Data release.

Gold prices were unperturbed by rising trade war fears and dropped below $ 1260 levels to hit fresh yearly lows. Gold is likely losing its allure as a safe-haven asset as it fell to $1,253 in Asia – the lowest level since December 18 despite the rising odds of a full-blown trade war between the US and the rest of the world.