Markets Too Sanguine On Growing Global Trade Risks - BBH
Global equity markets have barely blinked after the Trumpadministration imposed a 10% tariff on $200 billion products imported fromChina; however, currency analysts at Brown Brothers Harriman say that marketsare too sanguine on the potential risks of the ongoing trade war. They notethat along with China, the U.S. has ongoing trade talks with Japan, Europe andlooks to revamp the North America Free Trade Agreement. “Military strategistscan attest to the difficulty of fighting a war on two fronts,” they say. “Byour last count, the US is fighting one on four fronts.” Along with risinggeopolitical uncertainty, the currency analyst also warns that the tradetensions should lead to higher inflation pressures. “The US has long-enjoyedcheap manufactured imports from China,” they say. “A 10% (rising to 25%) tariffwill be passed on to consumers to some degree that that will add to theinflationary pressures already present in the US.”
By Neils Christensen of Kitco News; nchristensen@kitco.com
MKS: Break Above$1,215 Would Make Gold Shorts Nervous
Tuesday September 18, 2018 08:43
Should gold break above $1,215 an ounce, thiscould encourage buying in the form of shorts, or bearish traders, exiting themarket, says MKS (Switzerland) S.A. Analysts note gold initially dipped below$1,200 an ounce in overnight Asia-Pacific trade before buying emerged. Thetrade war between the U.S. and China, and its impact on the foreign-exchangemarket, remains one of the key influences for gold. “Broad interest toward$1,193 remains supportive for bullion; however, should the greenback firmfurther, gold could extend through to $1,185,” MKS says. “Resistance at $1,215is the key for an extension to $1,230, with recent shorts likely to becomenervous around these levels.”As of 8:40 a.m. EDT, spot gold was down $1 to $1,200.10 an ounce.
By Allen Sykoraof Kitco News; asykora@kitco.com
Commerzbank: ETFGold Outflows Hit 84 Tonnes In 3Q
Tuesday September 18, 2018 08:43
Outflows fromgold exchange-traded funds so far in the third quarter are probably comparableto the amount of the precious metal that has been bought by central banks, saysCommerzbank. The ETFs trade like a stock but track the price of the commodity,with metal put into storage to back the shares. “Gold ETFs recorded outflows of2.3 tonnes yesterday,” Commerzbank says. “A good 84 tonnes of gold have beenwithdrawn from the ETFs tracked by Bloomberg this quarter, which probablyequates roughly to the amount bought by central banks.”
By Allen Sykoraof Kitco News; asykora@kitco.com
FXTM: Markets Show ‘Muted Response’ ToLatest Trade-War Developments
Tuesday September 18, 2018 08:43
Global markets, including the U.S. dollar,are showing a muted reaction so far Tuesday to an escalation of the U.S.-Chinatrade war, says Lukman Otunuga, research analystat FXTM. U.S. President Donald Trumphas imposed a 10% tariff on an additional $200 billion worth of Chinese goods. “Financial markets offered a fairly muted response to theannouncement as the tariffs were already heavily priced into markets. Investorsare instead likely to remain guarded and adopt a wait-and-see approach ahead ofChina’s possible retaliation to the latest round of U.S. tariffs,” Otunugasays. “In the currency markets, dollar bulls are interestingly nowhere to befound today despite simmering trade tensions weighing on investor confidence.Buying sentiment towards the greenback could receive a boost if Beijing’spotential reaction increases trade-war fears and promotes risk aversion frominvestors.” The analyst adds that even though the fundamental drivers behinddollar’s recent strength remain intact, the greenback is starting to lookbearish on the daily technical charts. As of 8:25 a.m. EDT, the spot dollarindex was 0.049 point higher to 94.125. The dollar is especially important tothe metals markets since base and precious metals alike often move inversely tothe U.S. currency.
By Kitco NewsFor Kitco News
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