This week Donald Trump announced a step back from his previous decision about trade with China. Just a couple of weeks ago the American President went ahead with announcing more tariffs for Chinese goods, somewhat surprisingly, especially considering his administration was negotiating with the Chinese at the time. Yesterday, however, he stated that the tariffs will be delayed.
Because of this, yesterday the financial markets were slightly more risk-friendly than usual. Nevertheless, this optimism hasn’t extended into today. Investors still highly doubt that the trade dispute between the United States and China will be resolved soon.
Moreover, investors are additionally leaning towards low-risk assets because of persisting geopolitical tensions. In the United Kingdom the high likelihood of a no-deal Brexit is keeping everyone on their toes. Italy may be preparing for snap elections. And, as reported yesterday, protests continue in Hong Kong, while Argentina is plunging into another crisis. There’s also the fact that the US and Iran’s relationship has worsened over the past few months and the Middle East is becoming more unstable than usual.
All of this has contributed to the strengthening of safety assets. Gold has climbed to $1500, while the Japanese yen is trading near 106.47 versus the American dollar.
