Daily Update - 28th August 2018
Risk appetite took over financial markets following a dull start to the week, with US equities entering unchartered territory, weighing on the greenback.US session, and Trump's tweets enlightened the last trading session of the day. But regarding Canada, Trump also said that the best option would be either to make a separated bilateral agreement with the country or directly imposing tariffs on Canada. The US President claimed that the country and Mexico reached a new trade deal and that Canada will soon join talks.Trump and Republicans in the U.S. Congress up for reelection in November want to ensure farmers and other voters whose jobs depend on trade with Canada and Mexico that the deal is sealed. Sterling firmed against the dollar on Monday as dollar dipped after risk sentiment in the broader markets improved following a well-received speech from Federal Reserve Chairman Jerome Powell. Symposium at Jackson Hole, the Fed chairman on Friday emphasized the central bank's push to raise interest rates despite President Donald Trump's recent criticism of higher borrowing costs. Powell made the case that gradual rate hikes are the best way to protect the U.S. economic recovery and keep job growth as strong as possible and inflation under control. His comments were also seen to have disappointed some dollar bulls hoping for a more hawkish message. Trump criticized the Fed for raising interest rates at a time when the government was trying to stimulate the economy. Interest rate hike expectations have supported the dollar this year as the U.S. economy tracked a stable growth path. Interest rate hike expectations have supported the dollar this year as the U.S. economy tracked a stable growth path. German IFO survey, which showed that business confidence improved by more-than-expected in August. Economic data out of the U.S is on the heavier side, with key stats scheduled for release including June house price figures, July trade data and August’s CB Consumer Confidence numbers. While we will expect consumer confidence to be the key driver this afternoon, we can also expect some influence from other stats including wholesale inventories, the Redbook and Richmond manufacturing numbers. Outside of the data, noise from the Oval Office will remain a factor, with the U.S now expected to shift attention to Canada, favouring a bilateral trade agreement over NAFTA. Yesterday’s Focus
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