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Market View

Market Recap- The stakes are getting higher

Wednesday, May 8, 2019 10:40 AM GMT

Starting from the Trump’s tweet on Sunday, markets are presenting a Dr. Jekyll and Mr. Hyde kind of mode as we pass from the Japanese to the European to the USA session. The bulls (to rephrase it, the investors going long EUR –AUD –CAD –NZD –Equities) are prevailing during the Japanese and the European session, the bears (to rephrase it, the investors that are going long the safe havens USD-JPY-CHF) are prevailing at the beginning of the US session.

The fact of the matter is that President Trump announced and the US negotiator Bob Lighthizer confirmed, that tariffs on Chinese goods will be increased by this Friday, contrary to what the markets were expecting. On the other hand, the fact of the matter is that the scheduled trade negotiations between China and the USA have not been postponed, as Liu He, the Chinese negotiator, is confirmed to travel to Washington on Thursday.

Furthermore, the last 24hours included the rate cut of the Central Bank of New Zealand, the disappointing Chinese trade balance, and the decreasing year on year monetary base in Japan. Note that the Japanese are now back to work, following the 10 days long Golden Week.

As far as the geopolitical risk is concerned, Iran is set to announce that they will reduce some “voluntary” commitments within its nuclear deal, that they would not withdraw from it, but would potentially give a 2 months’ deadline for the EU to help them.

 

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