Brexit and the US-China trade Tensions not going anywhere

Weekly Report - 22/10/2018

Brexit and the US-China trade Tensions not going anywhere


Brexit last week and its absence of development at the EU Summit will probably increase tensions on the GBP and the UK administration to find a resolution to the Irish Border problem that has been promoted as the possible obstacle that will engulf Britain’s Brexit plans. The conflict inside the UK administration over Brexit will probably continue to add problems to the Pound. European Union negotiators attempt to reduce the market fear regarding a no deal. As for the ongoing U.S. – China Trade war it remains with neither of them to trying to end it. US President Trump is in no position to support a solution to this before the mid-terms, with the possibilities of duties rising from 10% to 25% on $200bn at the start of following year. With the Chinese economy marking the slowest extension since 2009, the Chinese administration will be considering to renew trust, while showing an unwillingness to back down.

The Week that was

On Thursday U.S. crude futures dropped to an almost 5-week low of $ 68.48, falling more than $8 a barrel from this month's 4-year high at $76.89. That's an extraordinary 11% plunge from top to trough over just two weeks. In the meantime, on Thursday,  Brent crude went all the way down at $78.68 a barrel down $8, or 9.3%, from its 4-year high at $86.74 on Oct. 3. On the crypto world, we saw Bitcoin’s struggles resume on Thursday, with Bitcoin decreasing by 1.80% off the back of Wednesday’s 0.27% drop, to end the day at $6,613.2.


Main Focus This Week

Now About the Italy problem, the European Union Commission may be trying to limit damage, a new strategy they develop after the lessons they learned from the Greek fiasco 3 years ago. Although it may not only be the EU Commission that upsets the markets, with ECB President Draghi speech about the budget and disagreement within the coalition, also there is the influence on the EUR in the coming week. Saudi Sanctions are in focus this week following the confirmation of Khashoggi’s murder in the Saudi embassy. How the United States answers to the admission will have an important impact on crude oil prices and risk appetite over the general market. Confusion in the Middle East will be an undesired result for all concerned.


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