It's been a rollercoaster ride of trade war sentiment over the last few months and it seems traders have now entered into a state of confusion at where things actually currently stand.
A sudden and significant escalation in the trade war last week came as China and the US both announced new tariffs - well, an increase in the case of the latter, triggering another plunge in stock markets as investors fled for safety.
This was followed by mixed messages from the US President, who initially admitted to having second thoughts which the White House later clarified as not being more aggressive. There's also been mixed messages about an apparent call over talks between the two countries, which suggests all is not as positive as Trump would have us believe.
Despite all of this, stock markets aren't exactly doing terribly just yet, which is probably what is giving the President such a feeling of confidence. Of course, that is predicated on the belief that the Fed will reluctantly cut rates at least a couple more times this year, despite suggestions from within that this is far from guaranteed.
European markets have enjoyed a small bounce this morning on reports of some domestic stimulus measures in China aimed at weathering the trade war and boosting the consumer. This will need to be a small part of a much broader package though if investors are truly going to get on board.
Nervy investors good for gold
The trade war is doing wonders for gold, which on Friday and Monday soared to new highs for the year as traders sought the comfort of a traditional safe haven. Does that settle the case against bitcoin as a safe haven? Probably not. The yellow metal remains number one for now, although there was no momentum to confirm the move so the rally may now be running on fumes.
We're now very much deep into the $1,520-1,560 territory that proved so problematic when we last traded in this region between 2011 and 2013 and the rally is struggling for momentum. This would be a natural place for some profit taking to kick in but in these nervy markets, who knows.
Oil unconvinced by Trump assurances
Oil prices are bouncing back a little but appear as unconvinced by Trump's reassuring words as the rest of us. Nothing about the escalation on Friday and the fighting talk that followed gives us any assurance that either side is serious about compromising, making any near-term deal unlikely.
So it becomes a question of how much it will weigh on global growth rather than if it will, which isn't great for oil prices. We are still trading around the middle of this year's range though so I don't think OPEC or Trump will be worrying too much.
Disclaimer: This article is for general information purposes only. It is not investment advice, an inducement to trade, or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. Ensure you fully understand all of the risks involved and seek independent advice if necessary. Losses can exceed investment.