European open – Trump, France, gold, oil, bitcoin

Trump at the Centre of the Storm

US President Donald Trump is already making waves in the markets this week as he arrives in London bearing gifts for his European allies, or should I say competitors?

Source – Thomson Reuters Eikon

Stock markets had a bit of a wobble on Monday after Trump announced the re-imposition of steel and aluminium tariffs on Argentina and Brazil, accusing the two countries of currency manipulation. I’m sure the people of these countries wish that was in fact true but unfortunately for them, it’s not that simple and Trump is merely compounding their problems as he prioritizes his election next year.

Trump has also been eager to take aim at Europe but has maybe been deterred from doing so as the risks of fighting a trade war on two fronts going into an election are too severe. The groundwork is being laid though with France the next target as he announced plans for retaliatory tariffs on sparkling wine, cheese and other goods in response to a digital services tax on large tech companies.

It’s not just Macron that may be wary of Trump’s visit. Reports that Boris is keeping Trump at arms length for fear of the President having a negative impact on next week’s election are just the latest in a series of cowardly acts by the Prime Minister. That said, Trump did his predecessor Theresa May no favours the last time they shared a podium when he claimed everything, including the NHS, is on the table in trade talks. Perhaps this is not such a bad idea after all.

Gold in consolidation mode

Gold prices are a little flat in early trade, somewhat reflective of what we’re seeing everywhere since the European open. We’re very much into consolidation mode in gold, the question is how long we’ll be here and where next. Momentum remains to the downside but a break back above $1,480 could change this. $1,440-1,450 to the downside is also key.

Oil not making a dent in Friday’s losses

Oil prices continue to pare Friday’s losses this morning but, as yet, they’ve barely made a dent. The sell-off on Friday was seemingly driven by very little but the inability to quickly reverse the losses suggests there’s more too it. Perhaps this is simply a sign of an overbought market, one in need of correction which is what we’re now seeing. A break below $60 in Brent could add to this.

Bitcoin still vulnerable

Bitcoin is stabilizing above $7,000 at the moment but whether it has the ability to build on the late November gains is still unclear. It failed at $8,000 last week and this will be the key test to the upside. The news hasn’t been great for cryptocurrencies in recent weeks which has driven prices lower and it’s not improving, leaving them vulnerable to further falls. Naturally, the recent lows around $6,500 is the big test going forward to the downside, with the area between $5,000 and $6,000 having provided plenty of challenges in the past.

Economic Calendar

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