Offshore Yuan hits new 2019 low as speculation circulates that trade discussions will pause

Just as markets thought there was a lull in news related to US-China trade tensions, reportscirculating around China's lack of interest to resume trade discussions with the United States has alarmed investors once again. The Japanese Yen initially took a sharp, risk-off turn on this news with the USDJPY pulling below the 110 level once again, but it is very much all eyes on the offshore China Yuan after it hit its lowest level for 2019 with the USDCNH touching levels above 6.94 at time of writing.

Markets remain uncertain at this point in time as to whether the seemingly confrontational rhetoric following the escalation in the US-China trade dispute over the past two weeks actually spells the death of any trade deal. Perhaps the weekend couldn’t have come at a better time, allowing time for investors to digest the latest commentary and ascertain whether both sides are playing hardballas an intended signal, a show of brinkmanship, or just plain noise before the scheduled G20 meeting in Japan next month.

Asian stocks are now trading mixed, while US and European stock futures are expectedto open lower, indicating that fears surrounding US-China trade tensions are still alive and kicking.

GBPUSD hits 3-month low as PM uncertainty weighs on Pound

The selloff in the Pound has intensified, with GBPUSD now breaking below the 1.28 support level for the first time since February, while the Pound endures its longest run of losses against the Euro since 2000. An added layer of uncertainty now hangs over the Brexit outlook, as UK Prime Minister Theresa May has agreed to begin the countdown to the end of her tenure, starting next month. May will first have to focus on a last-ditch attempt to get her Brexit deal approved in Parliament during the week of June 3, before working on a timetable to find her successor.

The Pound is reacting negatively to such political uncertainty, as markets try and ascertain what a new UK Prime Minister might mean for the Brexit path ahead. The downside for the Pound may be exacerbated, should the vacancy for the top job be filled by a hardline Brexiteer, which then risks the return of a no-deal Brexit.

Could Oil return to its 2019 high?

Oil’s rebound is gathering pace, as Brent futures are opening a path back towards the psychological $73/bbl level. Geopolitical tensions in the Middle East are threatening to escalate, pulling traders away from fundamentals to instead focus on fear as they drove up Oil prices this week. Should market jitters increase over potential supply disruptions, that could send Oil to a new year-to-date high, as demand-side uncertainties fade away in the interim.