Trade war anxiety continues to dominate the headlines

Daily Update - 28th June 2018

Yesterday’s Focus

• EUR Non-Monetary Policies ECB Meeting
• GBP BOE’s Governor Carney Speech
• USD Durable Goods Orders, Pending Home Sales

Yesterday’s explained

The euro declined against US dollar on Wednesday as concern about an escalating trade conflict boosted the dollar. Worries that a full-blown trade war will break out between Beijing and Washington continued to weigh on currencies and sent Chinese stocks hurtling lower, despite data showing profits rose at China's industrial companies.

The euro slipped in US session, under pressure from the trade conflict, the threat of a political crisis in Germany and uncertainty over a European Union summit. A row over migration within Germany's governing coalition will also weighed on the single currency. Angela Merkel hopes this week's European summit can save her from a migrant crisis that could cost her job.

Britain's pound declined sharply against the dollar on Wednesday as the greenback rebounded, on track for its biggest daily drop in nearly two weeks, as imminent Brexit talks and doubts the Bank of England will raise interest rates at all this year darkened the outlook for the pound.

The dollar gained as trade-related worries eased after the U.S. administration softened its approach to Chinese investment. Most of its gains came against the euro and the Swiss franc .Bank of England Governor Mark Carney on Wednesday said that British banks were fully prepared for a disorderly Brexit but shed little light on whether the central bank would raise rates at its next policy meeting.

 

Today’s Focus

• EUR European Council Meeting, Business Climate, Harmonized Index
• USD Jobless Claims, GDP Analysis, Personal Consumption Expenditure

Today’s Market

For the EUR, it’s a busy day ahead, following a relatively quiet first half of the week, with July consumer climate figures and prelim June inflation figures out of Germany, prelim inflation figures out of Spain and Italy and the ECB’s economic bulletin scheduled for release.Outside the data, the EU Summit will need to be considered, with EU Leaders expected to have trade high on the agenda, while also discussing Brexit, the Summit is also the Italian coalition government’s first that will bring the issue of migration to the fore.

For the Pound, there are no material stats scheduled for release, leaving the Pound in the hands of Brexit, as the EU Summit gets underway.Across the Pond, stats through the day include finalized 1st quarter GDP numbers along with the weekly jobless claim figures. Barring a material deviation from 2nd estimates, the Dollar will unlikely see a material move, with the weekly jobless claims figures unlikely to be too influential as the markets continue to focus on noise from the Oval Office.Outside of the stats, FOMC member commentary could also provide direction for the Dollar, with members Bullard and Bostic scheduled to speak through the day.