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The gold price appreciated 0.90% since Monday's session. During the previous trading session, the yellow metal broke the monthly R2 at the 1,227.33 mark to stop the trade at the 1,225.89 mark. During Tuesday's morning hours, the gold was trading at the 1.228.61 mark.

In regards to the near-term future, most likely, the gold will trade sideways to stay at the 1,230.00 level due to the resistance of the monthly R2 at the 1,227.33 level. The 55-hour SMA will try to catch up the rate during the trading session.

Besides, none of the technical indicators may change the yellow metal's trading direction on Tuesday.

The US Dollar appreciated 0.18% against the Japanese Yen since Monday's session. During the previous trading session, the currency pair was resisted by the 55-hour SMA during the whole trading session. During Tuesday's morning hours, the US Dollar broke the resistance of the 55-hour SMA to trade at the 112.11 mark.

In regards to the near-term future, the US dollar will trade sideways due to the resistance of the 100-hour SMA and the support of the 55-hour SMA. Most likely, the currency pair will trade at the 111.80 level during the session.

However, the 100– hour SMA and the pattern line could push the rate to pass through the support of the 55-hour SMA to trade at the 111.60 level on Tuesday.

The British pound appreciated 0.82% against the US Dollar since Monday's session. During the previous session, the rate was trading sideways between the 50.00% Fibo and the weekly PP at the 1.3147 level to stop the trade at the 1.3151 mark. On Tuesday, the rate was supported by the 100-hour SMA to trade at the 1.3200 mark.

In regards to the near-term future, the British pound will surge upwards to the weekly R1 at the 1.3260 mark due to the support of the 100-hour SMA. Most likely, the British pound will trade at the 1.3200 level on Tuesday.

Moreover, none of the technical indicators may resist the rate from the surge on Tuesday.

The European Single Currency appreciated 0.42% against the US Dollar since Monday's session. During the last trading session, the currency pair broke the 55-hour SMA to stop the trade at the 1.1581 mark. During Tuesday's morning hours, the rate was located at the 1.1591 mark.

In regards to the near-term future, most likely, the European Single Currency will move upwards to bounce off the upper boundary of the pattern line to trade at the 1.1600 level. The 55-hour SMA should support the rate during the trading session.

On the other side, the currency pair might break the resistance of the pattern line to surge to the weekly R1 at the 1.1638 level on Tuesday.

EUR/USD is steady in the Tuesday session, after posting slight gains to start the week. Currently, the pair is trading at 1.1579, unchanged on the day. On the release front, German ZEW Economic Sentiment plunged to a level of -24.7, well below the estimate of -12.3 points. Eurozone ZEW Economic Sentiment followed a similar trend, falling to -19.4, compared to a forecast of -9.2 points. In the U.S, JOLTS Job Openings is expected to dip to 6.90 million. The markets are still waiting for the U.S Treasury to release its semi-annual currency report, which may occur on Wednesday.

Confidence in the German economy continues to sputter, as German ZEW Economic Sentiment dropped sharply to -24.7 in October, after a reading of -10.6 a month earlier. The ZEW assessment noted that there is increased pessimism over the German economy due to the escalating trade war between China and the United States. A second factor is worries over Brexit, with fears that the U.K will depart from the EU without an agreement in place. Both issues have dampened export expectations. The indicator finds itself in negative territory for a seventh straight month. Investor sentiment in the eurozone economy also is weak, with the ZEW Economic Sentiment dropping to -19.4, its lowest level since August 2012.

EU leaders are meeting in Brussels, and officials had hoped that the summit would include a draft statement on Brexit, but this plan has been shelved due to a deadlock over the Irish border. The EU is insisting that it will not sign a withdrawal agreement with Britain, unless there is a backstop which allows Northern Ireland to remain in a customs union with the EU after Brexit. However, the British government is unlikely to agree to such a move, since it would require regulatory barriers within the United Kingdom. With plans for a Brexit statement at Wednesday’s meeting on hold, a Brexit statement with have to wait until EU leaders meet in November or even December, which is extremely close to the Brexit deadline in March 2019.

The cross accelerated lower on Tuesday as pound rallied on strong earnings data and Euro came under increased pressure on German ZEW miss.

Fresh bears dipped to 0.8754, marking over 61.8% retracement of 0.8723/0.8825 recovery leg and signaled lower top at 0.8825 (recovery top, posted on Monday).

Return below falling 10SMA (0.8784) brought daily MA’s back to full bearish setup and momentum turned south, adding to negative outlook.

Key support at 0.8723 (10 Oct low) is coming in focus, with break here to expose 0.8697 (29/30 May double-bottom) and open way for full retracement of 0.8620/0.9098 Apr/Aug uptrend.

Price action remains below thickening weekly cloud which twisted last week and maintains pressure.

Res: 0.8784, 0.8810, 0.8825, 0.8834
Sup: 0.8747, 0.8723, 0.8717, 0.8697

UK Prime Minister Theresa May is going to meet her cabinet today to unify a stance on Brexit negotiation, in particular the Irish backstop. Ahead of the cabinet meeting, Housing Minister James Brokenshire urged other fellow ministers to support May in "making further progress this week". And he emphasized that "whilst making sure that it is our entire United Kingdom that leaves the European Union, the single market and the customs union because it is our UK that is just so important."

Speaking to the parliament yesterday, May urged EU for not letting the stand-off over backstop to derail Brexit negotiation. However, an unnamed official was quoted by Reuters complaining that May's messages "demonstrate that finding an agreement will be even more difficult than one could have expected."

French minister for European Affairs Nathalie Loiseau said that "we want a good deal and we think it is possible." But she also said that France was preparing for a no-deal Brexit and have already made legislative proposals on the scenario. An unnamed official was quoted by Reuters saying that the government "need to prepare faster" for no-deal. And " it is in the interests of citizens and businesses to wrap up the exit agreement as swiftly as possible."

May is expected to tell EU leaders her views at the summit dinner tomorrow in Brussels.

• Brexit to be a focal point ahead of EU Leader Summit as PM Mayl trying to “solve the unsolvable” with regards to Northern Ireland
• UK Aug Wage data exceeds expectations (Weekly Earnings 3M/Y: 2.7% v 2.6%e)
• German ZEW survey registers a big miss as trade concerns and German coalition woes weight on sentiment
• US companies expected to report on Tuesday (including afterhours) include BlackRock, CSX, Domino’s Pizza, Goldman Sachs, IBM, J&J, Lam Research, Morgan Stanley, Netflix, United Continental, UnitedHealth and WW Grainger

Asia:

• China Sept CPI Y/Y: 2.5% v 2.5%e (7-month high)
• RBA Oct Minutes Uncertain consumption outlook was still important consideration. Data pointed to 'solid' GDP growth in Q3, though likely to moderate from the pace of H1.
• New Zealand Q3 CPI above expectations (Y/Y: 1.9% v 1.7%e)

Europe:

• PM May: Have made progress on Northern Ireland issue; the shape of our exit deal was now clear - comments to Conservative party. A backstop was needed in case of future setup not being ready in time; could not accept a border in the Irish Sea; backstop needed to be temporary. Would expect UK-wide customs arrangement to end by Dec 2021; hopes it doesn't have to be used at all
• Italy PM Conte: cabinet had approved the 2019 budget plan; draft to be sent to the EU Commission. Budget kept the government’s promises while keeping public accounts in order
• Italy Deputy PM Salvini was satisfied with budget and added that it did not raise taxes. Early retirement would create 400K jobs and expected €500M to be saved due to lower migrant spending. Reversing all 2011 pension reforms remained a goal
• Italy Dep PM Di Maio: Citizens income to start in Q1
• Italy Fin Min Tria: Budget reflected approved fiscal targets; we're in continued dialogue with the EU over budget plan. A 2.4% budget deficit was normal for Western countries and reiterated he won't resign after budget is approved
• ECB's De Guindos (Spain): Euro Zone should keep growing above potential. Core inflation was moderate now but likely would likely rise. Tighter labor markets andemergence of wage pressures are expected to continue to bolster underlying inflation
• EU President Tusk letter to EU Council noted that a no deal Brexit was more likely than ever before; Making every effort for an agreement. Brexit was more complicated than expected; EU must prepare for a no-deal scenario
• UK Ministers held meeting to discuss concerns on PM May Brexit plan. Reports circulated that 8 cabinet ministers were worried about the PM’s Chequers plans

Macro

• (DE) Germany: Import price inflation eased back to 4.8% y/y in August from 5.0% y/y in July. Expectations had been for a further acceleration in the headline rate, but energy prices stabilized, though remains very high due to a 33.2% y/y jump in energy prices. Import prices for consumer goods actually declined as did import prices for agricultural products. The elevated annual rates will likely continue to feed through the product chain.
• (US) US: The Treasury posted a $119.1B budget surplus in September up from the $7.9B balance last year. Receipts declined -1.5% y/y, versus -2.2% y/y last year, while spending collapsed -34.1% y/y versus 5.4% y/y a year ago. The huge drop was largely a function of the calendar with September 31 falling on a weekend (pushing October spending into September). It leaves the deficit at $779B compared to the $665.8B shortfall in FY17 - the largest fiscal deficit since 2012. The huge rise in fiscal deficit leading to a similar rise in the US trade deficit.
• (UK) United Kingdom: Germany sees no indication of breakdown in Brexit talks according to press reports citing an unnamed German government official as saying that talks are on track to meet the November time frame. Official talks have been put on the backburner, but EU 27 leaders meet for a working dinner tomorrow and for her part U.K. Prime Minister May has accepted an invitation to address the EU-27 leaders at the Article 50 council, although these meetings are never the forum for the real negotiations. Local commentators have suggested though that the public breakdown of talks this week is more than likely due to posturing designed to put Prime Minister May in a better position to push through a deal against the wishes of hardline Brexiteers.
• (UK) United Kingdom: August 3M average weekly earnings increased 2.7% y/y and 3.1% in ex-bonus and with-bonus respectively. The with-bonus figure was the best print since January 2009. The jobless rate remained unchanged at the 43-year low rate of 4.0%. The rise in wages will be seen by the BOE as justification for its gradual tightening bias.

SPEAKERS/FIXED INCOME/FX/COMMODITIES/ERRATUM

Equities

• Indices [Stoxx600 +0.4% at 361, FTSE -0.2% at 7012, DAX +0.2% at 11638, CAC-40 +0.1% at 5099, IBEX-35 +0.9% at 9004, FTSE MIB +1.1% at 19500, SMI +0.3% at 8678, S&P 500 Futures +0.3%]

Market Focal Points/Key Themes:

Equities

• European Indices trade mostly higher across the board with the Italian Ftse MIB outperforming following the submission of its draft budget, while the FTSE underperforms on Brexit uncertainty.
• On the corporate front shares of Volkswagen fades the initial spike lower to trade higher after Audi receives €800M fine by the EU and subsequently cuts outlook; BATs trades lower on cutting its Rev forecast; Tomtom reverses earlier gains on losing its contract with Volvo putting pressure on ability to achieve raised guidance. Elsewhere Talanx falls on cutting its outlook, with Merlin Entertainment another notable faller after its trading update. To the upside Ferrovial is higher on M&A talk, Bellway, Meggitt and Merck are higher on trading updates.
• Looking ahead notable earners include DOW Components Goldman Sachs and Johnson and Johnson, as well as Morgan Stanley and United Health among others.
• Consumer discretionary: British American Tobacco [BATS.UK] -1.5% (provides guidance before investor meeting), Merlin Entertainments PLC [MERL.UK] -6.5% (trading update), TomTom [TOM2.NL] -14% (earnings; raises guidance)
• Energy: Enagas [ENG.ES] +2% (earnings), Drax Group Plc [DRX.UK] +4% (acquisition)
• Financials: Talanx Group [TLX.DE] -5.7% (outlook cut), Bellway PLC [BWY.UK] +1% (earnings; dividend boost),
• Healthcare: AstraZeneca Plc [AZN.UK] +0.5% (FDA mutual designation for company and Merck & Co.), Merck KGaA [MRK.DE] +1% (affirms outlook ahead of capital market day)
• Industrials: Volvo AB [VOLVA.SE] -5.5% (engine issue detected), Meggitt Plc [MGGT.UK] +6% (trading update), Kion Group [KGX.DE] +9% (analyst action), NCC AB [NCCB.SE] -6.5% (preliminary earnings), Ferrovial [FER.ES] +4.5% (confirms exploring sale of Services division), Meyer Burger Technology [MBTN.CH] +3.5% (transformation program), Conzzeta AG [CON.CH] +1% (earnings)
• Utilities: Iberdola [IBE.ES] +0.5% (acquisition)

Speakers

• Italy Govt confirmed its 2018 GDP growth at 1.2% via its formal budget plan noting that employment trends in H1 2018 remained positive. Confirmed 2019 budget deficit to GDP ratio at 2.4% and forecasted debt-to-GDP to decline to 126.7% in 202. Asked EU for budget flexibility due to the Genoa bridge tragedy
• Italy Dep PM Di Maio: Situation in Italian bond yield spread seen as temporary
• Italy PM Conte commented in his Parliament ahead of EU Leader Summit that Italy’s 2019 budget plan was aimed at reducing the economic gap with the rest of Europe. A Brexit agreement must assured the rights of EU citizens in UK. Reiterated govt commitment to complete economic and banking union
• Senior EU official: Juncker to brief the 27 EU Leaders on the readiness for a 'no-deal' scenario at the Wed Summit dinner. Plan Brexit talks with UK PM May before EU Leader Summit dinner. Leader Summit to plan how to pursue the Brexit talks; a special Brexit Summit in November was NOT a given
• Eurogroup chief Centeno: Italy did not represent risks; region was too resilient to be disrupted by one budget
• Germany Bundesbank Beerman saw no Euro threat from Italy government
• Germany Dep Foreign Min Roth: EU had limited room for maneuver, needed to protect Ireland from a hard border. Germany was preparing for the worst but hoping for the best in Brexit negotiations. Understood that it was hard for PM May to get Parliamentary majority for Brexit deal.
• Spain Economic Min Calvino: Budget agreement with Podemos party could be the basis for a consensus
• European Research Group (ERG) said to have told Cabinet to push PM May to drop the Chequers plan (**Note: ERG is a part publicly funded, single issue (hard Brexit), research support group for the United Kingdom's Conservative Party)
• Hungary Central Bank (MNB) Gov Matolcsy: Central bank reviewed its gold strategy; to raise gold reserves 10-fold to 31.5M tons. Move intended to improve safety of reserves and mitigate risks
• Hungary Central Bank's Nagy: Gold purchase had a neutral effect on monetary policy
• BOJ Gov Kuroda: Globalization effects on prices differed depending on economy. Inflation trends mainly driven by domestic factors
• Philippines Central Bank (BSP) Board Member Medalla: There is good chance CPI could still quicken in Q4 but central bank could pause policy on signs m/m CPI was abating (**Note: Philippines Sept CPI reading of 6.7% was the highest annual pace in 9 years)
• OPEC Sec Gen Barkindo reiterated view that oil market is currently adequately supplied; sees potential for an imbalance in 2019 due to larger growth in supply

Currencies

• USD was slightly weaker in a quiet session but holding within recent range. Participants awaited the Treasury’s semi-annual currency report that was expected this week.
• EUR/USD steady bu holding below the 1.16 handle. German ZEW survey registered a big miss as trade concerns and German coalition woes weight on sentiment.
• The GBP/USD was higher by 0.3% as UK/EU official remained optimistic that a Brexit deal would occur. Some analysts did note that the markets seemed to be underpricing the risk of a near-term political crisis. Better Weekly Earnings data helped to push GBP/USD back above the 1.32 level. The key resistance area remains the 1.36 area (some 400 pips away).

Fixed Income

• Bund Futures trades at 158.41 down 16 ticks as the Italian/German 10-year bond yield gap tightens. A downside break of 157.25 sees 155.69 initially. To the upside 158.50 remains initial resistance.
• Gilt futures trades at 120.67 down 7 ticks following the move in Treasuries. Continued support at 120.50, with a continued move higher targeting 123.93 then 124.00.
• Tuesday's liquidity report showed Monday's excess liquidity fell from €1.906T to €1.905T. Use of the marginal lending facility stayed rose from €50M to €59M.
• Corporate issuance saw 4 issuers raise $10.3B in the primary market

Economic Data:

• (DE) Germany Aug Import Price Index M/M: 0.0% v 0.0%e; Y/Y: 4.8% v 5.2%e
• (NO) Norway Q3 House Price Index Q/Q: 0.4 v 2.1% prior
• (FI) Finland Aug GDP Indicator WDA Y/Y: 2.3 v 1.7% prior
• (CZ) Czech Sept PPI Industrial M/M: 0.3% v 0.2%e; Y/Y: 3.2% v 3.1%e
• (CZ) Czech Aug Export Price Index Y/Y: 1.6% v 1.8% prior; Import Price Index Y/Y: 2.9% v 2.5% prior
• (TR) Turkey Aug Industrial Production M/M: -1.1% v -2.4%e; Y/Y: 1.7% v 1.0%e
• (PL) Poland Sept Employment M/M: -0.1% v -0.1%e; Y/Y: 3.2% v 3.4%e
• (PL) Poland Sept Average Gross Wages M/M: -0.6% v -0.2%e; Y/Y: 6.7% v 7.1%e
• (IT) Italy Aug Industrial Sales M/M: +1.2 v -0.9% prior; Y/Y: 3.2% v 3.1% prior
• (IT) Italy Aug Industrial Orders M/M: +4.9 v -2.2% prior; Y/Y: 0.9% v 2.8% prior
• (UK) Sept Jobless Claims Change: +18.5K v +14.2K prior; Claimant Count Rate: 2.6% v 2.6% prior
• (UK) Aug Average Weekly Earnings 3M/Y: 2.7% v 2.6%e; Weekly Earnings (ex Bonus) 3M/Y: 3.1% v 2.9%e
• (UK) Aug ILO Unemployment Rate: 4.0% v 4.0%e, Employment Change 3M/3M: -5K v +15Ke
• (EU) Euro Zone Aug Trade Balance (seasonally Adj): €16.6B v €14.7Be; Trade Balance NSA (unadj): €11.7B v €17.6B prior
• (DE) Germany Oct ZEW Current Situation: 70.1 v 74.4e; Expectations Survey: -24.7 v -12.0e
• (EU) Euro Zone Oct ZEW Expectations Survey: -19.4 v -7.2 prior
• (IT) Italy Sept Final CPI (includes tobacco) M/M: -0.5% v -0.4% prelim; Y/Y: 1.4% v 1.5% prelim
• (IT) Italy Sept Final CPI EU Harmonized M/M: 1.7% v 1.8% prelim; Y/Y: 1.5% v 1.6% prelim, CPI FOI Index Ex Tobacco: 102.4 v 102.9 prior

Fixed Income Issuance

• (ES) Spain Debt Agency (Tesoro) sold total €2.67B vs. €2.0-3.0B indicated range in 3-month and 9-month Bills
• (ZA) South Africa sold total ZAR2.4B vs. ZAR2.4B indicated in 2032, 2035 and 2044 bonds
• (CH) Switzerland sold CHF549.9M in 3-month Bills; Yield: -0.884% v -0.868% prior

Looking Ahead

• 05.30 (UK) Weekly John Lewis LFL sales data
• 05:30 (EU) ECB allotment in 7-Day Main Refinancing Tender (MRO)
• 05:30 (HU) Hungary Debt Agency (AKK) to sell in 3-month Bills
• 05:30 (DE) Germany to sell €4.0B in 0% Sept 2020 Schatz
• 06:00 (IL) Israel Q2 Final GDP Annualized (3rd reading): No est v 1.8% prelim
• 06:00 (IT) Italy Aug Total Trade Balance: No est v €5.7B prior; Trade Balance EU: No est v €2.7B prior
• 06:00 (FI) Finland to sell €1.0B in 0.50% Sept 2028 RFGB bond
• 06:30 (EU) ESM to sell €2.0B in 6-month bills; Avg Yield: % v -0.501% prior; Bid-to-cover: x v 2.0x prior (Sept 18th 2018)
• 06:45 (US) Daily Libor Fixing
• 07:45 (US) Weekly Goldman Economist Chain Store Sales
• 08:00 (PL) Poland Sept CPI Core M/M: 0.0%e v 0.1% prior; Y/Y: 0.8%e v 0.9% prior
• 08:00 (HU) Hungary Central Bank (MNB) Interest Rate Decision: Expected to leave Base Rate unchanged at 0.90%
• 08:00 (BR) Brazil Aug IBGE Services Sector Volume Y/Y: +0.25e v -0.3% prior
• 08:05 (UK) Baltic Dry Bulk Index
• 08:30 (CA) Canada Aug Int'l Securities Transactions (CAD): No est v 12.7B prior
• 08:55 (US) Weekly Redbook Sales
• 09:00 (EU) Weekly ECB Forex Reserves
• 09:00 (HU) Hungary Central Bank (MNB) Gov Matolcsy to hold his post rate decision statement
• 09:00 (IT) Italy PM Conte speaks in Parliament ahead of EU Leader Summit
• 09:00 (RU) Russia announces weekly OFZ bond auction (held on Wed)
• 09:15 (US) Sept Industrial Production M/M: 0.2%e v 0.4% prior; Capacity Utilization: 78.2%e v 78.1% prior, Manufacturing Production: 0.2%e v 0.2% prior
• 09:30 (NZ) Fonterra Global Dairy Trade Auction: Dairy Trade price index
• 10:00 (US) Oct NAHB Housing Market Index: 67e v 67 prior
• 10:00 (US) Aug JOLTS Job Openings: 6.900Me v 6.939M prior
• 10:30 (CA) Canada to sell in 3-month, 6-month and 12-month bills
• 11:30 (US) Treasury to sell 4-Week and 8-Week Bills
• 16:00 (US) Aug Total Net TIC Flows: $60.3Be v $52.2b prior; Net Long-term TIC Flows: No est v $74.8B prior
• 16:15 (US) Fed’s Daly (voter)
• 16:30 (US) Weekly API Oil Inventories
• (CO) Colombia Sept Consumer Confidence: 6.2e v 4.7 prior

Saudi index has lost all the gains for this year and oil could see a big move here

The Saudi stock market is currently in turmoil, which is leading Investors to lose their confidence by pulling money out of the country. The disappearance of journalist Jamal Khashoggi has raised Saudi Arabia under the spotlight and proved to be a major market event. President Trump has vowed “severe punishment” if the journalist was killed.

Initially, Saudia Arabian King Mohammed bin Salman has denied any knowledge about this death. However, following the most recent development, Saudi Arabia is expected to issue a report on Khashoggi and acknowledge the death of the journalist was due to an interrogation that went wrong. The purpose was just to abduct him, but the operation was not cleared by the authorities and individuals will now be held accountable. Yesterday, President Trump also suggested that rogue action may have taken place.

It is unsure how many believe such a statement, but the question is how Donald Trump will proceed after this. The reason he is involved is because of his close relations to Saudi and his recent visit to the country which showed the world their strong ties. All this is thanks to his son in law, Jared Kushner, the White House adviser who masterminded the entire new relation with Saudi Arabia after Obama administration clearly made their distance.

Mohammad Bin Salman appears to be one of the most proactive people the kingdom has ever had. Nobody has ever tried to convince several business leaders that they should use Saudi Arabia as the platform for their research labs the way he did. During his recent visit to the U.S., he met with Silicon Valley leaders and top executives. This kind of move is unprecedented and clearly shows that he is eager to diversify the country’s economy. In other words, he could be after creating another Silicon Valley in Saudi Arabia.

After holding a successful Economic Reform Event in 2017, the King decided to create the “Davos in the Desert” but it failed. Major media outlets and business executives have decided not to participate. JP Morgan CEO and Ford’s Chairman are just a few top executives in that category. If you want to attract Foreign Direct Investment FDI, businesses need assurance that they have the freedom to conduct their business, news wires have the freedom to report the actual picture and the political situation is stable enough. Saudi Arabia tied itself in unnecessary wars with neighbouring countries. Despite all these, businesses were still likely to consider the country as an option, but after Trump’s “severe punishment” remark, things have changed.

Whether Trump really adopts a tough stance against Saudi Arabia, remains to be seen. In the meantime, the Saudi stock index plunged nearly 7% during the session on Sunday after Trump’s initial comments and bounced back up yesterday after his softer tone. The index is up nearly 1.53% year to date, but these gains are under threat again as the sell-off is picking up steam. Trump has left it open whether his administration will be part of the investment summit in Saudi Arabia. If the situation between Saudi Arabia and the U.S. becomes intense, one thing that will be at threat is the peg between the Saudi Riyal and the dollar. We have seen this peg coming under serious pressure when the price of oil dropped at the lower 20s

Saudi is in a much stronger place compared to other countries the U.S. tried to put pressure on in the past. This is mainly because Saudi Arabia controls the OPEC cartel and it plays an important role here. It has the ability to put the supply and demand equation completely out of whack and trigger something similar to the Oil Embargo back in 1973.

Having said this, the United States have made several changes over the years and it is the work of the precious presidents which brought the U.S shale oil production to a level not seen before. But this doesn’t mean that the US and other OPEC countries can fill the gap. In other words, if the U.S. plays the same game it did with Iran, it is hard to imagine other countries stop buying Saudi oil.

Remember, if the U.S. bans other countries from buying Saudi oil, this could trigger a huge rally in the cryptocurrency market. It has been brought up several times before that countries could dump the dollar as the benchmark currency to trade oil and instead use Bitcoin. Despite the massive scalability issues, there is a strong possibility that Saudis may join forces with other countries that are facing similar obstacles. Hence, the entire thing could backfire for the Trump administration.

But Trump has made one thing clear from day one. He is more focused on his personal interests than anything else. He remarks that it will be foolish to cancel the arms deal with Saudi Arabia, as Saudi Arabia was a clear evidence of this.

Trump is an unpredictable individual, capable of picking fights with anyone without thinking about potential consequences for the country. It is this element that makes investors highly sensitive. Saudi Arabia is the single biggest outside investor in SoftBank Group Corp. The group’ stock price sunk the most in more than two years on Monday on the back of the disappearance of journalist Jamal Khashoggi. When a stock falls like this, one way to measure the risk is to look at the cost of their Credit Default Swap. The cost of this “against no-payment” has surged for SoftBank Group Corp and the chart below shows the CDS has jumped considerably, crossing the critical level of 10.

German ZEW economic sentiment dropped to -23.7 in October, down from -10.6 and missed expectation of -12.3. That's also the lowest level since 2012. Current situation index also dropped to 70.1, down from 76 and missed expectation of 72. Eurozone ZEW economic sentiment dropped to -19.4, down form -7.2 and missed expectation of -9.2. Current situation index rose 0.3 to 32.0.

ZEW President Achim Wambach said in the release: "Expectations for the German economy are dampening above all due to the intensifying trade dispute between the USA and China. The resulting negative expectations on German exports are now beginning to show in the actual development of exports. A further negative influence on economic and export expectations is the danger of a 'hard Brexit', which is becoming ever more likely. Last but not least, the situation of the governing coalition in Berlin is perceived to have become more unstable, which also weighs on economic sentiment."

Full release here.