23rd July 2018 Market Update
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?? GBP – Sterling benefited from Trump’s comments by climbing against the dollar on the Friday but otherwise data was thin on the ground for the end of the week.
Overall the pound managed to claw back some of the losses suffered at the beginning of the week as markets look to have repositioned themselves before the weekend and any further Brexit developments.
BoE member Ben Broadbent will be speaking at 6pm but otherwise no data out during European trading hours.
?? EUR – The euro also benefited from Trump finishing the week higher against the dollar. There was no data out on Friday also.
No major news out today but attention will fall on the ECB on Thursday. No major changes expected with regards to their base rate and deposit rate, but as always, the devil will be in the detail of Mario Draghi’s accompanying rate statement with regards to QE.
?? USD – Trump was busy on Friday firing shots both domestically and internationally. Trade war talk intensified once again as Trump threatened to put tariffs on all of China’s US$500bn imports sparking concerns to investors once again.
Trump then went on to criticise the Fed’s current rate hiking cycle and subsequently went on to criticise the strength of the US dollar. The Trump administration has never shied away from making its feelings known of wanting a weaker US dollar and Friday’s comments once again echo this stance.
Whilst Trump was criticising the value of the dollar, the PBOC went in to the markets and devalued their own currency, the yuan, the most since 2016 bringing in the prospect of a full-blown currency war.
The dollar index, which measures the value of the dollar against a basket of currencies, dropped by 0.64% as a result.
No data out today but investor attention looks set to be on any additional rhetoric from the President’s administration.
No key announcements today.
Summary: The Trump effect came into full force on Friday as he intensified further trade war talks in addition to commenting that the dollar may be too strong, as well as his criticism of the Fed raising interest rates.
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