"It's quite a whirlwind of things happening on the trade war front," says John J Hardy, Saxo's Head of Forex Strategy, after a weekend that saw president Trump castigate the EU as "possibly as bad as China, just smaller". This has exacerbated the already strained US/EU trade relationship and Europe will now, like China, seek to impose its own retaliatory tariffs.
In forex markets, the dominant theme is a sharply weaker Chinese yuan. "This deserves all the focus, against the USD we're getting to levels where the temperature is really turning up higher. Pay attention to this, of course at some point the Trump administration is going to respond," says Hardy.
Elsewhere, the Mexican election resulted in a strong parliamentary majority for the leftist popularly know as Amlo, and he might win control of the senate too, putting the left in a very powerful position in the US' southern neighbour. In Europe, German political chaos persists as Chancellor Merkel continues her efforts to save her coalition, which is on the point of collapse over immigration policy.
It's been a busy weekend in oil markets too, also triggered by a tweeting Trump who declared on Saturday that Saudi Arabia's King Salman had agreed to increase production of crude oil by up to two million barrels a day in order to reduce market prices and make up the shortfall from Iran and Venezuela, says Ole Hansen, Saxo's Head of Commodity Strategy. Trump's message was subsequently diluted in an additional statement by the White House press secretary.
"We have to stick to the facts now, and those facts are that we have high oil prices at the moment because of supply disruptions, including some which have been caused by Trump himself, especially against Iran," Hansen notes. But though oil prices are elevated for now, this may not last very much longer, he adds: "Weaker economic growth may trigger a halt to the rally. China, Japan and South Korea all reported a slowdown in export orders in June amid an escalating trade dispute with the US," Hansen concludes.