- USD should fare well this week, despite trade war
- Chinese yuan could come under renewed pressure
- Expert believes S&P 500 could recover over next two weeks
Although the United States is now officially involved in a trade war with the world’s second-biggest economy, some analysts expect US stock markets to fare relatively well this week after data about the job market came in better than expected.
Many experts are worried, however, that trade tensions between the world’s two biggest economies could negatively impact the Chinese yuan, which could come under renewed pressure.
Al Mal Capital Chief Investment Officer and Managing Director Charles-Henry Monchau said: “Historically, July is a good month for the S&P500… and there are lots of blue-chip stocks that are oversold on the S&P500, so I won’t be surprised to see recovery there over the next two weeks.”
He added that the exception to such a recovery could be US industrial stocks.
Monchau pointed out that the negative impact of the US-China trade war might not be as severe as expected and that stock markets have already factored this in. He also believes that the benefits of the US government’s fiscal policies could prove to be greater than generally accepted.
The dollar index dropped by 1.4% from June 28 to July 6, which could give some respite to gold prices. Since the US Fed adopted a hawkish position on monetary policy in the middle of June, gold prices have dropped by 3.6%.
Think Markets UK Chief Market Analyst Naeem Aslam said that when it came to gold, traders are very cautious. He added that gold’s trading range is close to 6 USD, which indicates that capitulation might be near.
Aslam said the gold price, which presently stands at around $1,255, might break through the $1,280 level in the days ahead if the USD continues its current losing spell.
