Risk on the back foot as trade jitters start to creep in
US futures turn lower alongside bond yields, gold moves higher
Trump delivers yet another punch to markets and surprise, surprise it is trade once again stealing the headlines.
While the whole "will they, won't they?" situation with China is well telegraphed to have potentially dragged on to next year, Trump saying that it could drag on until after the US election means that both sides may not be that close to any deal after all.
It probably says that no matter how many rounds of negotiations there has been, there are some key red lines that both sides just cannot get around or move on in this ordeal.
US futures have been brought lower with E-minis now down 0.4% while Treasury yields are also dragged down on the day. In turn, that has pushed gold higher alongside the yen.
The aussie and kiwi are still maintaining some of their earlier gains but are about 20 pips off their highs against the dollar currently.
The reaction in markets have been a bit "mild" in my view. I was expecting more of a bigger jolt but if anything else, we could see risk trades slowly be taken lower over time.
In the big picture, this still keeps the likes of gold as an attractive bet - especially when there are also questions being asked of the US economy as we saw yesterday. Not to mention as we move closer towards seasonal demand territory for the commodity.