- Trump administration is further ranching up the tensions
- European car industry may face tariffs
Trade tariff trade is a funny one because if we have learned anything in the last few months since this trade tension issue has emerged is this that traders have bought the dips and sold it on top. Having said this, Trump administration is further ranching up the tensions around global trade war and investors have become increasingly nervous. The market action on Wall Street and in Asia was the evidence of this. However, investors over in Europe decided to shaken these concerns. It is highly likely that the dominant trend may remain skewed to the downside.
If the US stops Chinese investment in certain US sector, it will have a strong counteraction. Treasury secretary, Steven Mnuchin has said that more details on this would follow by the end of this week and this is going to keep investors even more nervous. On top of this, Trump administration is further adding to this uncertainty by keep sending conflicting statements; one person would say it is fake news and another would say more details on the topic would emerge sooner than later.
Looking at the biggest economy of the Eurozone, Germany, one can tell how much pain investors are feeling. Trump has shown initiatives to target the European car industry. The DAX index is at its two months low and the FTSE index is equally feeling the similar pain. If the trade tariffs on the European car industry become a reality, we will be set for another wild ride. The European markets would likely face a serious sell-off and the auto sector would be the focal point of this.
Back in the forex market, the British pound is still holding on to its most of its gains as investors continue to price in the possibility of another rate hike by the Bank of England.
Trade tensions aren’t helping gold at all, there is only one clear trend which is skewed to the downside. By looking at the chart, it appears that bulls have left the town. We think that the price would continue to move lower and it is likely that we test the support at $1250.
