USD

President Trump’s waging of the trade wars with both Mexico and China again created a sense of caution across all markets, including for the dollar. Already this week, tariffs enabled the President to make ground on his Mexican migrant agenda, with Mexico agreeing to curb the flow of US-bound migrants within 45 days as demanded. This kind of result led the President to again bring out the threat of tariffs, this time with China

Yesterday saw Trump threaten China with tariffs on 300bn of Chinese goods should President Xi refuse to meet him at the G20 Summit in Japan this month, while he today reiterated that he had no interest in trade negotiations unless Beijing were to agree to several ‘major points’.

Investors are awaiting the release of CPI data later today, which, coupled with tomorrow’s US retail sales, will set the scene for next week’s widely expected interest rate cut from the Federal Reserve. As investors give credence to the increasing number of calls for the cut, the dollar stumbled behind the euro and dollar today.

EUR

The euro has enjoyed further gains against the dollar this week, building to an 11-week high, on the back of a dollar suffering from lingering tension between US and China, and US and Mexico. This offers a stark contrast to President Trump’s claims that the euro is devalued against the US dollar.

Investors are yet to react to ECH President Draghi’s words this morning. In his speech, he expressed concern for the euro zone, declaring that Central Europe has ‘become vulnerable to shocks to international trade and financial conditions’. In other news, many eyes are still on the lookout for signs of a further interest rates cut.  

GBP

The pound recovered slightly as Parliament got back to business in delivering Brexit and avoiding a ‘no deal’ departure. The tabling of multiple motions is expected today, one attempting to bind the new PM to ruling out a ‘no deal’ Brexit, and one attempting to deliver the Parliamentary timetable over the MPs on June 25th – a move that was previously used to seek an extension to the Brexit process.  

The frontrunner amongst the leadership candidates, Boris Jonson, is set to launch his leadership campaign today. Johnson’s flagship policy is widely believed to be delivering Brexit, be it with a deal or without one, by 31st October at the latest, and rejecting some of the other candidates’ assertions of another necessary extension. The former Mayor of London warned the other candidate and his party of the threat that a general election and possible Labour victory could pose to them if the deadline isn’t adhered to.  

The pound could still be in for a rocky week, however, with tomorrow’s RICS House Price Balance data expected to reflect a weakening of house prices, discouraging investors.

CAD

The Canadian dollar dropped against the US dollar as expectations of rate cuts by the US Federal Reserve grow. A potentially quick resolution to the US-Mexico trade war also led to a downturn for CAD, creating fears over the US turning their attentions to Canada with tariffs and a trade stand-off.   

It was good news for the Loonie, however, against GBP as forecasts from Scotiabank predict further losses amongst Brexit and leadership uncertainty. 

JPY

US-China tensions weigh heavy on the Japanese Yen, as the threat of tariffs on China lingers on. Hope for a resolution and a productive meeting between President Trump and President Xi is still held out, however.