President Trump's latest decision to impose tariffs on steel and aluminium producers has already prompted talk of retaliation from European Commission president Jean-Claude Juncker while depressing risk sentiment across world markets.

"The real victim here will likely be emerging markets," says Saxo Bank head of equities strategy Peter Garnry while Saxo commodities head Ole Hansen adds that he sees the situation likely leading to reduced demand for oil and refinery products, particularly transportation fuels.

Crude oil made headlines yesterday as the spread between WTI and Brent crude ballooned to over $10/barrel, a three-year high, with Hansen reporting that it comes down to price differentials between WTI at the delivery hub at Cushing, Oklahoma relative to the export terminals at Houston.

"We ultimately see increased US export opportunities as being likely to rein in the spread before it widens to levels such as the $20/b seen in 2013," says Hansen.

In equities, 233 Chinese A-shares were added to the MSCI emerging markets index today with A-shares now representing 16% of that index. In terms of today's equities trade, Garnry says that US data, and particularly the nonfarm payrolls release, will likely be key.

"We expect the nonfarm payrolls print to show strength despite weak ADP figures midweek," says Garnry, while Saxo head of forex strategy John Hardy points to average hourly earnings as the key metric.

While the strong dollar is pinning gold in a tight range around $1,300/oz and weighing on EM as a whole, Hardy says that the crucial development here likely relates to expectations for the Federal reserve's rate hike cycle as hawkish forecasts falter.

"We are seeing expectations for a three-hike scenario weaken while one-hike forecasts rise," says Hardy, adding that EURUSD is in focus today after faltering around the 1.1750 mark; the euro's fortunes remain tied, of course, to the political unrest seen in Italy and now Spain, where PM Rajoy faces a vote of no confidence today.

Source: Saxo Bank
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