The Euro is shifting lower in early trade as tensions in Eurozone continue to escalate over a German ruling that challenges the European Central Bank’s (ECB) quantitative easing program, adding to the laundry list of woes for the Euro.

The Australian dollar is trading a bit softer ahead of this week’s US-China trade call. But sullying the current landscape, China -Australia trade relationships will be tested for sure as the Australian government is set to aggressively push back against the Chinese government’s reported decision to impose an eye-popping 80 % tariffs on imports of Australian barley.

The Pound is trading a tad softer after UK Prime Minister Boris Johnson suggested there would be no immediate end to the government-imposed lockdown but outlined a gradual plan to resume economic activity.

The Ringgit will trade on better footing with Oil prices rallying into the weekend. Still, the currency will need to bide time until the BNM’s recent rate cut can work its way through the economy.

In the meantime, the U-turn on globalisation and the expected fits and start around US-China tension do not precisely portray the Ringgit as an attractive alternative investment to the US dollar, but this will gradually improve as Malaysia moves toward easing the MCO restriction.

Gold market

There has been a lot of focus on Fed funds futures having gone negative, possibly signalling market expectations of negative rates in the US.

Still, with the better payroll prints to a degree, it lessened that possibility and gold sold off.

The US jobs report it tarnished gold lustre, as focus shifted from the headline data to the positive rebound in hourly earning. Before NFP, gold traded up, building on substantial gains made the previous day. Firm prices in Europe and Asia lasted into early US trading.

Gold rallied despite the broader financial markets adopting a mild “risk-on” tone, which is usually unfavourable for gold. But that correlation has broken down of late as equity market “risk-on “appetite is primarily driven by central bank largesse, which is equally supportive for gold.

Gold took a knock, but the uptrend remains firm since gold has a plethora of factors in its favour and none more so than the latest Eurozone legal imbroglio. Germany’s former finance minister, Wolfgang Schaeuble, said the German constitutional court’s ruling means “the existence of the euro may be now put into question in other European Union member states” (Redaktionsnetzwerk Deutschland). This is the kind of comment that can add jet fuel to the gold rally.

Given that risks abound, you probably want to own gold for what is happening right now. And it would help if you certainly had gold in your portfolio for the grim economic events that are yet to unfold. But you unequivocally want to own gold for those things we hope that does not happen down the road.

Currency and gold markets analysis and insights from Stephen Innes, Chief Global Market Strategist at AxiCorp