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Market Update

EncoreFX’s daily market updates are written by our experienced and professional dealing team.

Easing Trade Tensions with China; OPEC Ready to Offset Iran

Published May 14, 2018
  • Trade talks will resume between the US and China on Tuesday with Treasury Secretary Steve Mnuchin and Chinese Vice Premier Liu He. Over the weekend, tensions between the two countries seemingly eased with President Trump coming to the aid of China’s ZTE Corp. Trump’s announcement was widely welcomed Monday in Beijing which should create a more positive backdrop for continuing talks.
  • Italy’s populist Five Star Movement and League have agreed on a program for government that will introduce a flat tax rate of 15%, guaranteed income for the poor, and a lowering of the retirement age. Markets have remained relatively silent to these proffered socioeconomic policies as many analysts are counting on a wide divergence between mere proposals and the parties’ ability to follow through on the creation of laws.
  • United Arab Emirates Energy Minister has stated that OPEC has more than enough spare capacity to counter any supply constraints as the US prepares the re-imposition of sanctions on Iran. West Texas Intermediate for June delivery was trading at $70.74 this morning as the crude build up pauses. The rhetoric between the US and European countries continues to reinforce the notion that any business done with the Islamic Republic will be met with additional sanctions.
  • The new US embassy in Jerusalem will be instated today and will be marked as one of Trump’s most antagonistic foreign policy maneuvers yet. The move comes amid increased regional tensions between Iran and Israel with the Syrian conflict setting the stage for continued aggression between the two nations.
  • FOMC member, Loretta Mester, said the Federal Reserve may have to raise interest rates to a restrictive level in order to meet its twin goals of stable inflation and low unemployment. “As the expansion continues, it could be that in order to maintain our policy goals, we may need to move the fed funds rate, for a time, a bit above the level of the funds rate that is expected to prevail over the longer run,” Mester said in a speech early in the morning in Paris, France.