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

Markets Edge Higher on Monday

European stocks are off to a decent start on Monday, at the start of what should be a far more entertaining week than the one just passed.

The demand for constant updates on the trade talks doesn’t appear to be subsiding, although that may change as attention shifts elsewhere throughout the week. A deal looks no closer to being achieved and if reports over the weekend are to be believed – that China wants the full removal of existing tariffs – I don’t expect it to be wrapped up any time soon.

The only scenario in which Trump administration agrees to this is if it gets the full comprehensive trade deal it initially sought, rather than the interim phase one it’s settled for. If tariffs are removed, the US has lost its leverage and the incentive for more talks disappears. At that point, phase one is just an acknowledgement that nothing more is possible.

Trump could have big say in UK election

Trump will be over in my neck of the woods this week, attending the NATO summit in London and, quite frankly I’m not sure who will be more nervous. Labour leader Jeremy Corbyn and London Mayor Sadiq Khan have become used to being the target of the US President’s attacks but it’s the unintentional consequences that tend to be most damaging.

The visit comes at a very sensitive time, only 10 days before the election when the NHS has once again been a hot topic, most notably its role in future trade talks with the US. Trump didn’t help the Conservatives when he claimed everything is on the table and Corbyn and his team have certainly jumped on that.

Add to that his clear support for Brexit and one that more resembles Nigel Farage’s fantasy version than what Boris has negotiated and the current PM may well be more nervous than anyone about the visit of his friend. Coming at a time when the Labour Party is gaining on the Conservatives, Trump could have a big impact on who will be the next resident in number 10.

Gold still vulnerable despite Friday bounce

Gold prices are slipping a little today but nothing has really fundamentally changed, with the yellow metal spending much of last week bouncing around in a very tight range between $1,450 and $1,460. It eventually broke above here but that didn’t last long and we’re already back below $,1460. Gold continues to look vulnerable to a break below $,1440 will which draw attention back to $1,400.

Oil bounces on encouraging Chinese data

Oil prices slumped on Friday in thin trade as a rally that was already running on fumes finally stalled, likely triggering a bunch of stops in the process. Brent and WTI are both trading more than 1% higher today – buoyed by an encouraging growth in the Chinese manufacturing PMI over the weekend – but that pales to insignificance compared with Friday’s moves. This may be a market prone for correction.

Bitcoin slips after last week’s rebound

Bitcoin prices are tumbling again at the start of the week. The rebound we saw last week was always likely to face challenges around $7,500-$8,000 and that’s exactly where we’ve rotated off. It’s found some support around $7.000 but the near-term outlook for bitcoin isn’t looking to rosy.

Economic Calendar

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Craig Erlam

Craig Erlam

Former Senior Market Analyst, UK & EMEA at OANDA
Based in London, Craig Erlam joined OANDA in 2015 as a market analyst. With many years of experience as a financial market analyst and trader, he focuses on both fundamental and technical analysis while producing macroeconomic commentary.

His views have been published in the Financial Times, Reuters, The Telegraph and the International Business Times, and he also appears as a regular guest commentator on the BBC, Bloomberg TV, FOX Business and SKY News.

Craig holds a full membership to the Society of Technical Analysts and is recognised as a Certified Financial Technician by the International Federation of Technical Analysts.