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Trump’s trade war continues

19th June 2018 Market Update

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🇬🇧 GBP – There was no data of note from the UK yesterday and there is no data of significance out today. Some political uncertainty has arisen as the House of Lords blocked the government’s EU (Withdrawal) Bill, and their amendment stated that Parliament should have to approve the direction the government takes if there was no final agreement with the EU.

🇪🇺 EUR – Yesterday ECB President Draghi made the opening remarks at the ECB forum on central banking and is due to make more remarks today. However, unless any clarity concerning potential interest rate rises is made, the rates are unlikely to move in response.

🇺🇸 USD – There was no particularly relevant data out from the US yesterday. Trump has maintained his “trade war” rhetoric with China though, and as a result stock markets appear to have dropped at the open. The US dollar also seems to have strengthened as a safe haven currency as a result this morning. Today building permits are being released from the US, however this is unlikely to cause any significant market movement.

 

Key Announcements

🇪🇺 EUR
09:00am: ECB President Draghi Speaks

🇺🇸 USD
13:30pm: Building Permits

 

Summary: The rates appeared range bound throughout the day yesterday, and then Sterling gradually edged off overnight against the US dollar in to this morning. This could be in part due to the House of Lords defeating the government on the EU withdrawal bill. Their amendment, backed by 354 votes to 235, stated that MPs should approve what the government do next if there was no final agreement with the EU.
 
Yesterday evening ECB President Draghi gave the opening remarks at the ECB forum on central banking, and today he is also making remarks at the forum. However, unless any more distinct forward guidance is given it is unlikely there will be any market movement. Investors were also alarmed as Trump appeared to up the “trade war” rhetoric, which could partially explain the dollar’s strength as a safe haven.

 

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Darren Kilner

Darren Kilner

Darren is Head of Dealing at FairFX. Darren lives and breaths FX, his Mastermind topics are G8 currencies and economic forecasts.

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