26th July 2018 Market Update
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?? GBP – There was very little news from the UK yesterday bar the BBA mortgage approvals which surprised to the upside, hitting a 9-month high in June. The pound did move higher against the dollar but remained fairly flat against the euro in an otherwise quiet day.
Today again features an empty economic calendar for the pound and so analysts will be on the lookout for any Brexit or interest rate linked news to provide direction.
?? EUR – The US President Donald Trump and EC Commission President Jean-Claude Juncker announced yesterday that the Eurozone and US will launch a new phase of trade negotiations, working to lower trade barriers and zero tariffs. They also agreed to increase trade in agriculture, notably increased soy bean exports to the EU. Importantly, it was agreed that all new tariffs, including automobile tariffs will be suspended during the negotiation period. Overall, cooling off fears of heightened trade wars between the two regions, though it is still too early to say that this is any more than a semi truce.
Today the market will likely digest the result of yesterday’s trade meeting ahead of the ECB meeting. Following the announcement on the ending of QE in the last meeting, the market will be looking for indications on whether interest rates are likely to rise earlier than the summer 2019 timeframe previously set.
?? USD – The US had a range of low importance data released in the afternoon that was largely overshadowed by the President’s meeting with his opposite number from the EU. The US dollar lost ground in the morning but recovered strongly around 3 o’clock before falling off again overnight. The dollar index moved to its lowest since July 10th, thus it seems that USD was acting as a safe haven with trade war risks.
Today sees the initial and continuing jobless claims figures at 13:30 which provide an ongoing commentary on the state of the labour market in the US. As such, it tends not to have a huge impact on the markets. Likewise, Durable Goods orders are expected to improve at the same time.
12:45pm: ECB Interest Rate Decision expected to remain at 0%
13:30pm: ECB Monetary policy statement and press conference
13:30pm: Goods Trade Balance expected to drop to -$67B from -$64.85 B
13:30pm: Durable Goods Orders expected to increase from -0.4% to 3.0%
Summary: The trade meeting between the US and the Eurozone yesterday took centre stage yesterday, with positive moves from both the US and EU and a suspension of current tariffs, it was deemed a positive step, though trade war concerns have not been eliminated as of yet. The dollar weakened slightly as a result but remains relatively strong across the board.
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