Daily Analysis - 19/06/2018
Risk sentiment has soured today as trade war concerns escalated on news that U.S. President Trump threatened to impose more tariffs on China. This triggered a flight to safe haven assets such as the Japanese yen.
The dispute between the U.S. and China has rattled markets on concern that the move towards protectionism could slow global growth momentum. The U.S. is looking to slap another $200 billion in tariffs on Chinese goods, while China vowed to retaliate. The USDJPY pair dropped over 100 pips in early morning trade, falling to 109.60 yen as investors rushed to the safety of the Japanese currency.
Commodity markets fell on the potential damage resulting from a trade war. Copper was one of the hardest hit, and copper futures tumbled sharply yesterday. Wheat, steel, aluminum, iron ore and soy beans contracts were also impacted negatively.
Crude oil rose above $65 a barrel on Monday on news that OPEC may ramp up production by a smaller amount than previously anticipated. The OPEC meeting on June 22 -23 will likely decide the future direction of oil prices.
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