Today we are seeing a decrease in the tension between the United States and China thanks to an announcement from the latter that it will cancel tariffs on some goods coming from the US. China already revised its tariffs earlier this year, and now it is doing it again, this time for precious metals imports. With the recent escalation in the relationship between the world’s two largest economies due to the coronavirus pandemic, this comes as good news and reassures investors that the trade war will not resume for now.
The coronavirus pandemic seems to be coming to a halt. Despite a few countries still observing increases in the number of Covid-19 cases, most of the world has already reached the peak of the outbreak. This week many countries will exit the state of emergency they entered in March, or otherwise end their lockdowns.
It will be crucial to keep an eye on the spread of the pandemic to see if a second wave is coming when things return back to normal. Experts have pointed out that there were new cases as soon as Germany and South Korea retracted some of the safety measures against Covid-19. The fear of a second wave of the global pandemic is good for safety assets like the dollar.
Arguably the most important fundamental report today will be the inflation rate from the United States. Due to the coronavirus pandemic and all of its negative effects on the economy, inflation is supposed to slide down and perhaps even turn into deflation before long. The overall inflation rate is expected to be 0.4%, while core inflation is forecasted at 1.7%.
Meanwhile, we are seeing a recovery on the oil market today. Saudi Arabia announced that it will cut its production further than previously agreed. This helped boost prices to $24.40 for the WTI and $29.78 per barrel for the Brent crude. Furthermore, because other OPEC member states look towards Saudi Arabia for guidance, we might see them do the same and implement their own cuts too, which would bring prices further up.
