This bombshell development is set to fuel concerns over sizzling US-China trade tensions threatening global growth and stability. With this news being released just before Jerome Powell’s keynote speech, investors should fasten thier seatbelts and prepare for potential volatility on Friday afternoon.
Market players are scattering away from riskier assets and stampeding to safe-haven investments such as the Japanese Yen and Gold ahead of Powell’s speech.
Technical traders will continue to closely observe how the USDJPY behaves around the 106.50 regions. An appreciating Yen should open the doors towards 106.00.
Gold rebounds on risk aversion
Gold is back in fashion on Friday with prices trading towards $1505 as escalating trade tensions accelerate the flight to safety.
For as long as global recession fears, trade uncertainty and Brexit among many other geopolitical risk factors weigh on risk sentiment, Gold remains shielded from downside shocks. Where the precious metal concludes this week will be influenced by how markets react to Jerome Powell’s speech at Jackson Hole later on today. Should he adopt an aggressively dovish stance and reinforce market expectations of a September rate cut, Gold is seen rebounding back above $1525.
Oil influenced by demand side concerns
The drivers influencing Oil markets have shifted from supply-side to demand-side concerns. This was confirmed on Friday after US-China trade disputes sent oil prices crashing towards $53.50.
Fears over slowing world growth denting demand for crude should ensure Oil prices remain depressed in the short to medium term. Another factor seen impacting Oil prices will be the value of the Dollar which continues to gain on safe-haven flows. The combination of Dollar strength and demand-side concerns have the potential to send both WTI and Brent lower in the week ahead. Focusing on the technical picture, WTI Oil remains under pressure on the daily charts.
A breakdown below $55.00 should open the doors towards $54.00 and $52.00 in the near term.
Disclaimer: The content in this article comprises personal opinions and should not be construed as containing personal and/or other investment advice and/or an offer of and/or solicitation for any transactions in financial instruments and/or a guarantee and/or prediction of future performance. ForexTime (FXTM), its affiliates, agents, directors, officers or employees do not guarantee the accuracy, validity, timeliness or completeness, of any information or data made available and assume no liability as to any loss arising from any investment based on the same.
This article was originally posted on FX Empire
More From FXEMPIRE:
- Bitcoin Cash – ABC, Litecoin and Ripple Daily Analysis – 25/08/19
- Oil Price Fundamental Weekly Forecast – Expect Lower Demand Growth as US-China Trade War Escalates
- Stellar’s Lumen – Recap and Mid-Morning Review – 25/08/19
- U.S. Dollar Index Futures (DX) Technical Analysis – Strengthens Over 97.545, Weakens Under 97.510
- The Week Ahead: Trade, Stats and the G7 Summit to Drive the Majors
- Chinese State Council Slaps US with More Tariffs