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European Markets React To Trump Tweet

Donald Trump: Iran would suffer consequences never seen in history
The UK parliament will be going into a six-week recess
The overall sentiment for gold is negative
Spat between the US and China is at its peak level

US futures and European markets are trading lower as investors are reacting to late night tweet by Donald Trump, which stated that Iran should never ever threaten the US. Mr Trump even went one step further to say that Iran would suffer consequences never seen in history before.

Clearly, the tension has increased between the two countries, the US and Iran. The question is if the US can really afford to have a situation where it is not only losing its allies but also destroying its relations with other major countries. The spat between the US and China is at its peak level and there isn’t any solution in sight any time soon. Moreover, the US’s relations with the EU isn’t great at all.

If the economic engines of growth start to stall because of the trade war, there is little hope for peace. Yes, for now, the global growth is robust and even looking at the earning’s season, one could easily see that not only the companies over in Europe and US are beating the estimates, but the forward guidance is also encouraging. Donald Trump’s approach to trade negotiations is creating a major threat for the world economic growth and the world leaders have voiced their concern that putting the gun to their head isn’t going to work. Mr. Trump needs to be more reasonable with his approach.

Back in the UK, sterling traders had a hectic week and the focus remains on Brexit. The parliament will be going into a six-week recess on Tuesday and Theresa May’s hope is for the threats to her leadership to fade during this recess period. However, sterling traders might not have time to enjoy the recess period as the Bank of England will have to make a decision about their interest rate hike.

As for gold, the overall sentiment is negative. This is despite the fact that we have seen more tension between the US and Iran. Both countries have made some hot comments towards each other. However, the net impact isn’t that big at all. The dollar weakness has brought some life to gold but nothing major there either. In terms of levels, we are looking at the $1215 mark for now and a break of this would open the floor towards the next support level of $1200.

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