China Retaliates Tariffs, Canada and Mexico Give in

After reaching our target zone between $81-$85/b #XBRUSD declined slowly toward $75/b. on Tuesday as escalating trade tensions between the United States and China rattled financial markets. The sell-off followed China’s announcement of retaliatory tariffs on a range of U.S. imports, directly responding to President Donald Trump’s broad trade measures.

If Brent crude doesn’t manage to stop here, a return to $72-$70/b is the most probable scenario.
These developments hint at the possibility of a prolonged trade conflict between the world’s two largest economies, and also the two major crude oil consumers.
China’s new tariffs, set to take effect on February 10, will include a 15% levy on U.S. coal and LNG imports and a 10% tariff on crude oil, farm equipment, and certain automobiles.
Meanwhile, Trump delayed planned tariff measures on Canadian and Mexican imports by a month, after the two countries surrendered to part of his demands, signing agreements to strengthen border security to fight drug dealing and illegal immigration.
Gold hit record highs yesterday ($2830/oz.) amid trade war concerns, but it slipped by $20 overnight. A healthy pullback to the lower edge of the channel is a strong possibility at the current time.

The cryptocurrency market also came under pressure, but it recovered soon after. #BTCUSD rebound to $102,000, after losing some steam and returning to $98,000. Today, a big digital assets conference is due at 21:30 MT time, with both Trump and “crypto-knight” David Sax as speakers. The conference might shine some light on the future movements of cryptocurrencies.
Despite Trump’s press secretary announcing that the president is expected to speak with Chinese President Xi Jinping in the coming days, market sentiment remains fragile.
Traders should brace for further volatility amid the ongoing trade dispute.
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