Trade tensions have risen over the weekend with Trump doing an interview and taking more about tariffs on all European cars . The Europeans have now come out and said if they are introduced then they would retaliate with up to USD$300 bn of tariffs on US goods . Canada also introduced tariffs on US goods today covering many US products and designed to hurt producers in Republican held areas. Chinese tariffs are also due to come in to affect on July 6. So this week could be pivotal to the potential trade war.
When these tensions rise we tend to see a move out of stocks and back into the bond market and a move out of currencies and back in to the USD. We have seen this exactly today with the Dow at 24188 down 0.38% , the S&P500 at 2709 down 0.31% , and the Nasdaq at 7028 down 0.21%. We also see the US Dollar index at 94.78 up 0.46% , the EUR at 1.1614 down 0.58% , the GBP at 1.3139 down 0.52% and the JPY at 110.78 down 0.08%.
Crude oil has made a strong rally higher last week as markets remain sceptical about the production increases agreed at the Producers meeting last week and we saw a high of 74.46 for WTI. Last at 73.69. Trump tweeted that he had rung the King of Saudi and suggested that they increase production by up to 2mn barrels per day , however this could be fake news - markets not sure.
Daily Chart - US Business Confidence. Remains near 2 year highs.