Markets Shunted into Risk Aversion as US President Looks to Add $200B in Tariffs Against China

This led to a selloff in stocks wiping out all of yesterday’s modest gains and eating into the gains from Monday. Risk off extended to other markets as traders flew to safety with the yen gaining in value, USDJPY fall from 111.263 to 110.791, while AUDUSD took a hit falling from 0.74728 to 0.74045. The market is now waiting for the promised Chinese response, who said the US action was “shocking” and “unacceptable” and that they have no choice but to respond. Risk off sentiment is expected to dominate the European session.

UK Industrial Production (May) was -0.4% (MoM) and 0.8% (YoY) against an expected 0.5% (MoM) and 2.7% (YoY) from a previous -0.8% (MoM) and 2.9% (YoY) which were revised to -1.0% (MoM) and 1.6% (YoY) respectively. This data missed expectations and the previous readings were revised lower showing weakness in the sector but there the numbers did improve from last month’s readings. Manufacturing Production (May) was 0.4% (MoM) and 1.1% (YoY) against an expected 0.7% (MoM) and 3.1% (YoY) from -1.4% (MoM) and 2.9% (YoY) previously which was revised to -1.3% (MoM) and 0.9% (YoY). This figure improved but not as much as was forecast with the monthly data returning to positive territory. The negative impact from Brexit is continuing to plague the economy as orders are delayed and production postponed. The UK got a new data metric in the form of GDP (MoM) today. The expectation was for a reading of 0.3% and the data came in on target at 0.3%. GBP weakened as a result of the data release because the expectations were missed despite the uptick from previous readings with GBPUSD falling from 1.32936 to 1.32340.

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German ZEW Survey – Current Situation (Jul) was 72.4 against an expected 78.0 from a prior 80.6. ZEW Survey – Economic Sentiment (Jul) was -24.7 against an expected -18.2 from -16.1 previously. These data points have continued to soften as the economic data in Germany and the wider Eurozone disappoints. The deteriorating trade environment is also a head wind for business outlook with global trade war fears concerning participants. In April the sentiment reading dropped below zero and continues to decline. If these issues continue then sentiment will weaken further as businesses hold off on investments and expansion creating a negative cycle. The EUR weakened as a result of the decline with EURUSD slipping from 1.17263 to 1.17144.

Canadian Housing Starts s.a (YoY) (Jun) were released with a reading of 248.1K against an expected number of 210K from a previous 196K last month which was revised down to 193.9K. This data is showing a strong performance beating the expected number. Last month’s reading was revised down a little. CAD weakened against the USD from 1.31280 to 1.31435 in an odd reaction but reversed 15 minutes later with stronger Canadian Building Permits data. This can possibly be explained by the expected hike in Interested Rates from the Bank of Canada today. The BOC would see this strong data as a sign that rates can be comfortably increased with CAD expected to weaken against the USD if they do increase.

  • EURUSD is down -0.13% overnight, trading around 1.17289.
  • USDJPY is up 0.07% in the early session, trading at around 111.067
  • GBPUSD is down -0.09% this morning trading around 1.32618
  • Gold is down -0.36% in early morning trading at around $1,250.96
  • WTI is down -0.88% this morning, trading around $72.43

This article was written by FxPro

The Pound Continues to Weaken as UK Political Uncertainty Prevails, Global Stocks Rise

The initial move on the Davis resignation was for Cable to rally from 1.33000 up to 1.33500 but news of Johnson’s departure sent the pair down to 1.31940. Jeremy Hunt replaced Johnson as Foreign Secretary, PM Theresa May was quick to right the ship saying that there would be no second referendum on Brexit but that the Cabinet agreed to step up preparations for a “No Deal” scenario. GBPUSD bounced to 1.32690 as reports came in that a no-confidence vote on May’s leadership would not occur.

Elsewhere China and Germany signed a Commercial Accord involving VW, Siemens, BASF and others and committed themselves to multilateral global trade through the World Trade Organisation rules. Chinese Premier Li stressed the need to fight protectionism. The pair also agreed to remain committed to the Iran Nuclear agreement securing Iranian Oil shipments and stabilizing the region. This pushes US President trump further to one side as he is against the Iran Deal and will impose sanctions on companies doing business with the country. Both Germany (and the EU) and China are being hit with US trade tariffs, so for them, this comes as a natural response to US trade disruption. President Trump is to visit the UK later this week, with large-scale protests expected.

Consumer Credit Change (May) came in at $24.56B against an expected $12.50B from a previous reading of $9.26B which was revised up to $10.27B. This time the data beat expectations after coming in under expectations for five months in a row. The beat was nearly double the forecast and shows a considerable pick up in credit taken out last in May. Increases in this metric are a sign of consumer confidence as consumers take on more debt and lenders feel confident issuing loans. USDJPY had little reaction trading close to 110.800.

  • EURUSD is down -0.06% overnight, trading around 1.17422.
  • USDJPY is up 0.25% in the early session, trading at around 111.125
  • GBPUSD is down -0.17% this morning trading around 1.32328
  • Gold is unchanged in early morning trading at around $1,257.47
  • WTI is up 0.32% this morning, trading around $72.96

This article was written by FxPro

Crude Oil Gets Closer to Its Turning Point

The recent momentum of the dollar’s setback has been caused by some improvements in the world statistics in the recent weeks. But the growth rate of the world economy is noticeably lower than a few months ago, according to PMI, and the actual introduction of tariffs between the US and China will surely become an additional weakening factor.

Oil managed to overcome gravity for some time, but this growth seems illogical amid the growth of supplies from OPEC +.  According to many estimates, the increase in the production after the recent summit is very fast. In addition, after a few weeks of contraction, drilling activity in the U.S. has gone into growth again – this is another signal of production growth. On Friday, Baker Hughes said that the number of oil rigs grew from 5 to 863.

Thus, in the upcoming months, the world will face a slower global growth and an increased oil production. Last time this combination was observed in 2014 at about the same time: the growth in production, the slowdown of Asia, and the fears about the excessive stiffness of the monetary policy in the United States. Partly due to geopolitics, and partly simply because of the inordinate optimism of investors the oil managed to grow, but the situation was unfolded in late June 2014. Also, the oil unfolded as sharply as now in July 2008.

The oil rally may lose its momentum in the coming weeks if investors turn their focus from geopolitics to economic indicators.

If we look more strictly, of course, the oil not necessarily turns to fall in July. Corrections that began in April-May (2010, 2011, 2016) were not long and did not change cardinally the trend for growth.

However, if in the first half of the year the market frankly ignores economical negative for oil (like this time), in July-September the prices very often begin to collapse very rapidly.

By now, there is no reason to expect oil collapse as it was in 2008 or 2014. It is likely that the oil price will be under pressure because of the global supply growth with $40-$50 area, based on futures prices. Oil futures with long-range deliveries imply a scenario of adjusting quotes from current levels. It is quite possible that this scenario will begin to be implemented over the next several weeks.

What is more, that this development has one strong supporter: the U.S. President.

This article was written by FxPro

Pound Rises after Three UK Government Ministers Resign over the Latest Brexit Proposals

The UK’s Brexit Secretary David Davis has resigned along with two junior ministers, Steve Baker and Suella Braverman, over PM May’s latest softer Brexit proposals that were agreed at a cabinet meeting over the weekend. He said in a statement that his role requires an “enthusiastic believer” in May’s approach rather than a “reluctant conscript”. GBP reacted to the data during a period of lower liquidity with GBPUSD selling off a little from 1.33139 to 1.32846. However, the cable is trading higher on Monday morning at 1.3335, up 0.37%.

The full impact of the move has yet to be priced in with the possibility that PM May now places a more “enthusiastic believer” in the role which could result in a shift in Brexit negotiations going forward. Alternatively, this may result in a no-confidence vote and a leadership contest. All in all, it is shaping up as an interesting week ahead in UK politics.

US Non-Farm Payrolls (Jun) came out with a number of 213K against an expected 195K from a prior 223K which was revised higher to 244K. This measures the change in the number of employed people in June which is up from the forecast with a higher revision. The Unemployment Rate (Jun) was 4.0% against an expected 3.8% with a prior of 3.8%. This measures the percentage of the total workforce unemployed and actively seeking employment during June and is shown to be increasing.  Average Hourly Earnings (Jun) was 0.2% (MoM) and 2.7% (YoY) against an expected 0.3% (MoM) and 2.8% (YoY) from 0.3% (MoM) and 2.7% (YoY) previously. Labour Force Participation Rate (Jun) was 62.9% against an expected 62.7% from a prior reading of 62.7%. This data showed modest improvements and markets reacted positively to the headlines with the US 30 Index moving higher from 24281.90 to 24520.00 and EURUSD up from 1.17164 to 1.17669.

Canadian Unemployment Rate (Jun) was 6.0% against an expected 5.8% from a previous 5.8%. Participation Rate (Jun) was 65.5% against an expected 65.3% from 65.3% prior. Net Change in Employment (Jun) was 31.8K against an expected 24.0K from a prior -7.5K. Unemployment had fallen to the lowest levels in ten years and was settled around 5.8% but has risen 0.2% with this data. The Net Change in Employment data is showing a strong rebound, coming back into positive territory from under zero. Canadian International Merchandise Trade (May) was $-2.77B against an expected $-2.05B from $-1.90B previously which was revised up to $-1.86B. This fell to miss the expected forecast. Overall the report was positive as it showed more Canadians are working. EURCAD moved down to 1.53334 but rebounded higher to 1.54409 after the data was released.

Baker Hughes US Oil Rig Counts was released with a headline number of 863 up from last week’s 858 from 859 previously. Oil prices fell last week after a build in inventories following 3 weeks of bigger than expected draws. WTI Oil can become volatile around this data release and will be in traders’ minds when trading resumes on Monday. WTI finished higher on Friday to close at $72.39.

  • EURUSD is up 0.21% overnight, trading around 1.1773.
  • USDJPY is up 0.02% in the early session, trading at around 110.47
  • GBPUSD is up 0.13% this morning trading around 1.3335
  • Gold is up 0.40% in early morning trading at around $1,263.66
  • WTI is up 0.17% this morning, trading around $73.64

This article was written by FxPro

Some ECB Members Want Earlier Rate Hike, Global Stocks Mixed Ahead of Tariffs Deadline

The markets remain subdued after yesterday’s 4th of July celebrations in the US. US President Trump has restated his call for OPEC to bring down the price of gasoline. He recently backed Saudi Arabia to increase production after he targeted Iran with tougher than anticipated sanctions reducing Iran’s production by up to 1.1M bpd. An Iranian Republican Guard Commander has said that Iran would block the Strait of Hormuz if the US stops Iranian oil sales. Oil has shrugged off the news and is down today after hitting resistance at $73.85 on Tuesday.
In other news some ECB members are said to be troubled about the slow pace of rates hikes, saying that a Sept/Oct 2019 hike is too late. In response, the probability of a September rate hike has risen from 69% to 80% along with the EURUSD which is up 0.40% to 1.17000.
Asian stocks closed lower as Chinese tariffs deadline is looming and scheduled for tomorrow. European stocks opened the trading session higher as investors await the Federal reserve minutes today at 19:00 GMT.

Macroeconomic data

German Markit Services PMI (Jun) was out with a number of 54.5 against an expected headline number of 53.9 from 53.9 previously. After reaching a multi-year high in February at 57.3, this data has come back into its range under 56.0 with today’s number beating expectations. German Markit PMI Composite (Jun) was 54.8 against an expected 54.2 from a prior number of 54.2. This shows a stronger reading suggesting a stronger economy. EURUSD reached a high of 1.16815 before selling off.
Eurozone Markit Services PMI (Jun) was out with a number of 55.2 against an expected headline number of 55.0 against 55.0 previously. This reading beat expectation but is still down from the high of 58.0 in February. Markit PMI Composite (Jun) was 54.9 which beat the expected reading of 54.8 and the prior number of 54.8. The improvement in the readings is marginal but still leaves a question mark over the strength of the eurozone economy. EURUSD fell from 1.16796 to 1.16358 after this data release.
UK Markit Services PMI (May) was 55.1 against an expected 54.0 from 54.0 previously. This data is continuing to recover from its fall below 53.0, which was somewhat of a floor for the last 18 months. The number moved back into this range above 53.0 last month showing modest growth and has gained again with this reading setting a new high for 2018. GBPUSD moved higher from 1.31746 to 1.32234 in response to the release.
  • EURUSD is up 0.40% overnight, trading around 1.17000.
  • USDJPY is up 0.12% in the early session, trading at around 110.613
  • GBPUSD is up 0.05% this morning trading around 1.32325
  • Gold is down -0.12% in early morning trading at around $1,254.81
  • WTI is down – 0.73% this morning, trading around $72.39

This article was written by FxPro

Investors Pick Up Bitcoin after Its Fall to $6000

The news brings a cautious hope to the crypto investors that the market will turn to the growth. According to CoinMarketCap data, the total crypto market capitalization has increased by 17% to $275 billion since the beginning of July. For the recent 24 hours, Bitcoin (BTC) grew by 5% exceeding the mark of $6,650 and reaching two-week highs.

The leading altcoins follow the most famous cryptocurrency; however, they show a more considerable increase from 7% to 16.6%. Among top 50 altcoins, an anonymous currency Bytecoin (BCN) demonstrated the highest growth by 32%.

Bitcoin renews the local maximums and its current growth happens while trade discrepancies increase. A possible favorable decision of American regulators on Bitcoin ETF becomes the latest news driver and should lead to new money inflows from institutional investors.

With the trade volumes increase, the BTCUSD growth seems to inspire optimism in the short run after its decline under the mark of $6000 during the last weeks of June. Tech analysis admirers will pay attention to the mark of $6800, whenever it is reached it means that the “double bottom” pattern is formed which becomes a buying signal.

The idea that the $6000 mark became a strong support level for the bitcoin is gaining confidence now. The $6000-6500 price seems attractive for buying as it was last November and later in February and April this year.

Apparently, as price drawdown approaching the cost of mining level, it attracts major players who did not have enough courage to enter the overheated market earlier. While there is not any significant negative news, the major players are now picking the market up around previous important support levels.

This article was written by FxPro

Concern from China Has Sent Global Stocks Lower

The Japanese Yen gained a little against the dollar as the US currency weakened a little against the other majors. The risk today comes from low liquidity conditions. Yesterday there was concern from China when a court blocked the sale of memory chip maker Micron, sending stocks lower towards the US close. Oil had a whipsaw day as a bigger draw than expected in private inventories data affected the price. US inventories will be released tomorrow at 15:00 GMT.

UK Construction PMI (Jun) was out with a reading of 53.1 against an expected headline number of 52.0 from a prior number of 52.5. The number beat expectations after the data stabilized around 52.5 for the last two months, up from the low created in April at 47.0. The industry has recovered somewhat but is well off the peak from 2014 of 64.6. EURGBP moved down from 0.88476 to 0.88321 after this data release.

Canadian Markit Manufacturing PMI (Jun) was 57.1 against an expected 55.4 against the previous 56.2. This dataset broke above the high from February at 55.9, when it matched the April 2017 number. The expectation was for this reading to fall slightly from the high, as trade tensions start to impact manufacturing planning. However, the data beat and moved above the previous high from last month after a strong rise in new work orders. USDCAD fell from 1.31515 to 1.31389 after this data release.

US Factory Orders (MoM) (May) were 0.4% against an expected 0.0% from -0.8% previously which was revised higher to -0.4%. This data was expected to move to zero from negative territory today but outperformed and achieved a higher reading. The range of this data point over the last three years has been between +3% and -3.5%. USDCAD moved higher from 1.31444 to 1.31746 as a result of this data.

  • EURUSD is up 0.08% overnight, trading aroun1.16676.
  • USDJPY is down -0.16in the early session, trading at around 110.393
  • GBPUSD is up 0.06% this morning trading around 1.31975
  • Gold is up 0.38% in early morning trading at around $1,257.58
  • WTI is up 0.08% this morning, trading around $72.95

This article was written by FxPro

Global Stocks Steady as Merkel Holds onto Power in Germany

The RBA left rate on hold at 1.5% for Australia saying that inflation is likely to remain slow for some time, household consumption remains a source of uncertainty while low wage growth is likely to continue for some time. AUDUSD moved up from 0.73299 to 0.73607 and continues to climb as a result.

US WTI Oil has added 0.8% this morning as Libya declared a force majeure on its supply commitments as government forces have lost control of port facilities needed to export crude, with the action lowering supplies by 850K bpd. US Private inventories data will be released later today with a strong draw of 4.5M barrels expected.

Stock markets are stabilizing today as Asian equities are showing mixed results. An agreement reached in German late yesterday has removed some pressure from Angela Merkel and a small relief rally brought the DAX higher.

Macroeconomic data

UK Markit Manufacturing PMI (Jun) was out with a reading of 54.4 against an expected headline number of 54.0 from54.4 prior which was revised down to 54.3. The reading shows that the data beat expectations and was in line with the previous number. Slower output growth was a factor cited in the weakening number despite stronger new order inflows, strengthening job creation and is off the November highs. GBPUSD moved up from 1.31539 to 1.31749 following this data release.

Eurozone Unemployment Rate (May) was 8.4% against an expected 8.5% from the previous 8.5% which was revised down to 8.4%. The Unemployment Rate fell to a new low of 8.4%, a level not seen since August 2008. It had remained at 8.5% for the last three readings showing that the labor has stabilized somewhat. It is estimated that there are now 13.656M people unemployed in the euro area in May. EURGBP moved up from 0.88377 to 0.88522 after this data release.

US ISM Prices Paid (June) was out at 76.8 against a consensus of 76.2 expected. The previous reading was 79.5and this shows a beat on the forecast of drop in the cost of goods and services from the previous month’s number. ISM Manufacturing PMI (June) was also out and came in at 60.2beating the expectation of 58.1 from 58.7 previously. This number is moving higher towards the high of 60.8 in February.  USDJPY fell from 110.905 to 110.671 after this data release.

  • EURUSD is up 0.07% overnight, trading aroun1.16467.
  • USDJPY is up 0.08% in the early session, trading at around 110.980
  • GBPUSD is up 0.06% this morning trading around 1.31495
  • Gold is down –0.16% in early morning trading at around $1,239.90
  • WTI is up 0.77% this morning, trading around $73.40

This article was written by FxPro

Chinese Bourses Falling for the Third Week in a Row

The recent impulse occurred after the U.S. imposed duties on Chinese goods with a capacity of $50 Bln, and soon promised to expand them to $200 Bln. During this time, China’s largest companies have lost more than 10% of their capitalization, according to the FTSE China A50 Index, which sagged by 12%.

In total for 2017, the turnover of China and the U.S. made about $600 Bln., and investors are worried about the development of this situation. As long as politicians cannot find a common ground, the business community loses confidence, which is reflected in the results of the recent surveys. In the United States, they show a surge in inflationary expectations, and in China and Japan, there was a drop in the export orders and anxiety around future prospects.

What is noteworthy, the fall of the Chinese stock markets is taking place against the backdrop of the sharpest weakening of the yuan in recent years. Often the depreciation of the national currency is regarded as assistance to exporters. However, the markets believe that the 5%-yuan correction is not enough to compensate for the losses from the tariffs.

It is likely that the weakening of the Chinese yuan simultaneously with the country’s stock markets will continue until we hear changes in rhetoric from at least one of the parties to the conflict.

This article was written by FxPro

Risk off to Start the Week as Germany’s Coalition Strains, Global Stocks in the Red

The EU Immigration deal reached last week gave a short-term boost to the risk on side but now that the dust has settled cracks have appeared in the German Coalition. The increase in the number of migrants being accepted by Germany is fracturing the government and the leader of the CSU, Seehofer, has offered to resign if his party splits the coalition.

On the Brexit front, a record 75% of companies said they were pessimistic about the outcome of leaving the EU. The UK Government’s Chief Brexit Negotiator, Oliver Robbins, has said that they have no chance of striking a bespoke trade deal with the EU.

The trade war rumbles on as US President Trump targeted the EU in his latest speech, saying they were “as bad as China, only smaller”. He highlighted the importing of EU made cars and agricultural produce saying that the trade in these areas in one-sided. Chinese equity markets are down and European futures are pointing to a lower open.

UK Gross Domestic Product (Q1) was out with a reading of 0.2% (QoQ) and 1.2% (YoY) against an expected headline number of 0.1% (QoQ) and 1.2% (YoY) from a reading of 0.1% (QoQ) and 1.2% (YoY) previously with a revision up to 1.3% (YoY). Mortgage Approvals (May) were 64.526K against an expected 62.200K from a previous 62.455K which was revised up to 62.941K. The consensus was for a reading generally in line with expectations after the previous release was down as the economic output slows. The data increased (QoQ) and has remained positive since 2012. GBPUSD moved higher from 1.31214 to 1.31830 after this data release.

Eurozone Consumer Price Index – Core (YoY) (Jun) was 1.0% against an expected 1.0% from the previous 1.0%. Consumer Price Index (YoY) (Jun) was 2.0% against an expected 2.0% from the previous 1.9%. The data exceeded expectations and matched the 2017 high which was the highest reading since 2013, showing that last month’s beat had some substance behind it. The ECB will be taking note of this increase. EURUSD moved up from 1.16389 to 1.16593 after this data release.

US Personal Consumption Expenditures – Price Index (May) were 0.2% (MoM) and 2.3% (YoY) against an expected 0.2% (MoM) and 2.2% (YoY) from 0.2% (MoM) and 2.0% (YoY) previously. Core Personal Consumption Expenditures – Price Index (May) were 0.2% (MoM) and 2.0% (YoY) against anexpected 0.1% (MoM) and 1.9% (YoY) from 0.2% (MoM) and 1.8% (YoY) previously. Personal Income (MoM) (May) was 0.4% against an expected 0.4% from 0.3% previouslywhich was revised down to 0.2%. Personal Spending (May) was 0.4% against an expected 0.4% from 0.6% previouslywhich was revised up to 0.5%. This data came in largely as expected with a slip lower in personal spending along with a lower revision. USDJPY fell from 110.737 to 110.602 as a result of these data points.

Canadian Gross Domestic Product (MoM) (Apr) was 0.1% against an expected 0.0% from 0.3% prior. This showed that growth has flat-lined and is has managed to remain above the zero mark but is vulnerable to a drop in negative territory.  USDCAD fell from a high of 1.32592 to 1.31360 after the release.

  • EURUSD is down -0.36% overnight, trading aroun1.16395.
  • USDJPY is unchanged in the early session, trading at around 110.677
  • GBPUSD is down -0.22% this morning trading around 1.31738
  • Gold is down –0.25% in early morning trading at around $1,249.33
  • WTI is down -1.31% this morning, trading around $72.55

This article was written by FxPro

US Markets Blow the Biggest Intraday Gain Since February, Global Stocks Lower on Trade War Concerns

The President signaled that the CFIUS would regulate investments in the US which the markets took to be a softening of his position. US Stock markets rallied to the day’s highs posting the biggest daily gains since February with the US 30 up from 24284.00 to 24570.00, while in FX USDJPY gained from 109.969 to 110.486. But Chief Economic Advisor Kudlow reignited the fear of a hard-line approach when he said that “Trump is not retreating on China”. This wiped out all of the gains as the markets reacted to the headline, with the US 30 closing at 24117.59 down -0.7% and GBPUSD falling to the 113.000 level as the dollar strengthened throughout the day.

Global stocks trade mostly lower on Thursday morning as trade war concerns continue to weigh on the markets. Investors are still cautious and wait for new developments regarding US-China trade conflict.

US Durable Goods Orders ex Transportation (May) were -0.3% against an expected 0.5% from 0.9% previously which was revised up to 1.9%. Durable Goods Orders (May) were -0.6% against an expected -1.0% against -1.6% previously which was revised up from -1.7% and with the release of the data was against revised up to -1.0%. This data fell under 0% last month and stayed below this mark but came in higher than the previous reading. The ex-transports data missed its forecast and came in lower than the previous reading. This shows a slowing in quantity of orders placed. USDJPY went higher from 110.162 to 110.486 after this data release.

Pending Home Sales (MoM) (May) were -0.5% against an expected 0.5% from a prior reading of -1.3%. This data points missed expectations but came in higher than the previous reading. The data is expected to turn back above zero today but remains under that mark. This is in-line with the pattern from last year and if this is followed, next month should see a stronger performance. EURUSD fell from 116.112 to 115.749 following this data release.

New Zealand Interest Rate Decision was released with the RBNZ keeping rates unchanged at 1.75%. The Rate Statement was also released at this time. In the statement, the Bank said that they are well positioned to respond to any eventuality with the next rate move either up or down. They commented that the outlook has been tempered slightly by trade tensions. NZDUSD moved higher from 0.67779 to 0.68078 after the announcement.

  • EURUSD is unchanged overnight, trading aroun1.15552.
  • USDJPY is up 0.03in the early session, trading at around 110.290
  • GBPUSD is down -0.17% this morning trading around 1.30890
  • Gold is down -0.04% in early morning trading at around $1,252.50
  • WTI is up 0.07% this morning, trading around $71.79

This article was written by FxPro

Equities and USD Rebound in Risk Adverse Markets, Trade War Fears in Focus

US Company Harley Davidson has announced plans to shift some production out of the US in order to avoid paying tariffs when exporting its products into the EU. This is a blow for Presidents Trumps trade policy and is a bell weather for the extraordinary measures businesses are having to explore in order to weather the storm as trade relations break down. Harley Davidson shares dropped 5.97% yesterday with the US 500 down to 2717.00 and the Nasdaq down 2.17% to 7044.50 as it continues to fall since the US Supreme Court ruled to allow internet sales taxes last week. The JPY is strong today with the USD weak as risk-off sentiment persists as we close the half year this weak and traders are losing positions.

German IFO – Current Assessment (Jun) was 105.1 against an expected 105.5 from 106.0 previously which was revised to 106.1. IFO – Expectations (Jun) were 98.6 against an expected 98.5 from 98.5 prior which was revised to 98.6. IFO – Business Climate (Jun) was 101.8 against an expected 101.7 from 102.2 previously which was revised to 102.3. The data showed a weakening business climate in Germany following on from the fall in the March data. This data cannot be ignored as it surveys 7,000 businesses and is a leading indicator of economic direction. EURUSD moved higher from 1.16398 to 1.16708 after the release of this data.

Chicago Fed National Activity Index (May) came in at -0.15 against an expected 0.09 from a previous 0.34 which was revised up to 0.42. This data has now dropped below the zero level for 2018 with a high set at 0.88 in the February reading. A slip under zero can cause a market reaction but is not a worry in itself with the normal range being re-established. GBPUSD fell from 1.32869 to 1.32703 following the data release.

US New Home Sales (MoM) (Apr) were 0.689M against an expected 0.666M from 0.662M previously which was revised down to 0.646M. The data gained some ground on last month and is holding steady between 0.600M and 0.700M. Further improvement in these figures shows a pickup in confidence in the US housing market. EURUSD fell from 1.32800 to 1.32557 after this data release.

  • EURUSD is up 0.06% overnight, trading aroun1.17098.
  • USDJPY is down –0.14in the early session, trading at around 109.588
  • GBPUSD is up 0.04% this morning trading around 1.32820
  • Gold is down -0.13% in early morning trading at around $1,263.70
  • WTI is down -0.07% this morning, trading around $67.93

This article was written by FxPro

Risk off Sentiment Forces Market Participants out of Risk Assets, Global Stocks Mostly Lower on Trade War Concerns

Meanwhile, China and the EU have agreed to defend against the US position of multilateralism and to promote globalism. The PBOC cut the RRR over the weekend to ease the impact from US tariffs and the stock market fall, giving Chinese banks a 500 Billion Yuan cushion. This led to a small gain in Chinese equities, but with tension still high, that quickly evaporated and European equity futures are pointing to a bearish open. AUDUSD fell to 0.74150 while the Japanese Nikkei 225 is trading around 22300.00 with the yen gaining against GBP, USD and EUR. Oil was upon Friday after OPEC agreed on maintaining current production levels but has pared some of the gains today.

Eurozone Markit Manufacturing PMI (Jun) was 55.0 against an expected 55.0 from 55.5 previously. Markit Services PMI (Jun) was 55.0 against an expected 53.7 from 53.8 previously. Markit PMI Composite (Jun) was 54.8 against an expected 53.9 from 54.1 prior. This data stabilized somewhat, with Services and Composite readings beating expectations and previous readings. EURUSD reached down to support at 1.16408 before heading higher to 1.16747 after the released data hit the market.

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Canadian Consumer Price Index (May) was 0.1% (MoM) and 2.2% (YoY) against an expected 0.3% (MoM) and 2.5% (YoY) against 0.3% (MoM) and 2.2% (YoY) previously.Consumer Price Index – Core (MoM) (May) came in at -0.1% from 0.0% previously. BOC Consumer Price Index Core (May) was -0.1% (MoM) and 1.3% (YoY) against an expected0.2% (MoM) and 1.4% (YoY) from 0.1% (MoM) and 1.4% (YoY) previously. Canadian Retail Sales ex Autos (MoM) (Apr) were -0.1% against an expected 0.5% from -0.2% previously which was revised up to 0.0%. Retail Sales (MoM) (Apr) were -1.2% against an expected 0.0% from 0.6% previously which was revised up to 0.8%. These data points came in softer this month with all missing their consensus reading and most down since last month. Retail sales fell into negative territory this month. USDCAD spiked higher from 1.32776 to set a high for the day at 1.33810 on the back of the disappointing data.

US Markit Services PMI (Jun) was 56.5 against an expected56.4 from 56.8 previously. Markit PMI Composite (Jun) was 55.1 against an expected 55.1 from 56.6 prior. This data shows a drop in the metrics since last month although it was not as bad as forecast. GBPUSD fell from 1.32901 to 1.32490 as a result of this data.

  • EURUSD is down 0.12% overnight, trading aroun1.16414.
  • USDJPY is down –0.49in the early session, trading at around 109.440
  • GBPUSD is down -0.03% this morning trading around 1.32541
  • Gold is down -0.32% in early morning trading at around $1,265.00
  • WTI is down -1.44% this morning, trading around $67.97

This article was written by FxPro

US President Trump Wants a Further $200 Billion of Tariffs on China

The increase in intensity has markets rattled with stocks lower globally, Japan 225 Index down -1.75% overnight, and strong moves in USD Index as it fell below $95.00 yesterday, currently trading at $94.66. There was a noticeable shift in sentiment with USDJPY back down under 110.000 overnight. AUDUSD fell to a one year low at 0.73806 while AUDJPY fell from 82.000 to 81.000 as Australia is at risk of spillover from the impact of US tariffs on China.

In Germany, Angela Merkel is under pressure politically as a two-week deadline was imposed upon her to agree with a deal on migrants. This deadline will fall at the end of June and failure is likely to result in a break in the coalition and her being forced from her position as Chancellor. The German 30 Index fell yesterday -1.3% from 13064.00 and has declined further overnight with the index expected to open around 12710.00. EURGBP is down -0.09% around 0.86670.

US WTI Oil staged a recovery yesterday from support at $63.36 to a high of $65.78 after declining on Friday ahead of OPEC meetings this week. Headlines suggested that the production increases to be discussed at the meeting were much less than was reported, 300K to 600K against 1M to 1.5M barrels per day. The preliminary meeting is taking place today in Vienna and the market may be impacted by headlines from participants. Russia and Saudi Arabia want to increase production while Iran, Iraq, and Venezuela want to maintain current levels.

  • EURUSD is unchanged overnight, trading around 1.16224.
  • USDJPY is down -0.83% in the early session, trading at around 109.619
  • GBPUSD is up 0.07% this morning trading around 1.32554
  • Gold is up 0.37% in early morning trading at around $1,282.70
  • WTI is down -0.90% this morning, trading around $65.12

This article was written by FxPro

Oil Down Over 4% from Friday’s Open as OPEC Plans to Discuss Production Output in Vienna this Week, Global Stocks Lower

US Rig counts on Friday showed an increase of 1 to 863 as more US production comes online. The market expects production cuts to be eased adding more supply to the market and putting downward pressure on prices. The meeting is set to be contentious as Saudi Arabia and Russia are said to back the proposal to increase production by 1.5 million barrels per day, in order to maintain their market share, while Iran, Iraq, and Venezuela are set to block the proposal fearing lower prices and market instability. USDCAD traded higher to the 1.32000 level as Oil fell. Global stocks trade lower on Monday morning as trade tensions continue to weigh on the global economy.

Eurozone Consumer Price Index (Apr) was released and came in at 0.5% (MoM) and 1.9% (YoY) with a consensus for 0.5% (MoM) and 1.9% (YoY) from 0.3% (MoM) and 1.9% (YoY) previously. Consumer Price Index – Core (Apr) was 0.3% (MoM) and 1.1% (YoY) against an expected at 0.3% (MoM) and 1.1% (YoY) from 0.2% (MoM) and 1.1% (YoY) prior.  Labour Cost (Q1) was 2.0% against an expected 1.9% from 1.5% previously which was revised down to 1.4%. CPI data showed an increase in the monthly figures from the previous but was in line with consensus, while yearly figures came in as expected and remained in line with the previous reading. EURUSD rose from 1.15862 to 1.16149 due to this data.

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US Industrial Production (MoM) (May) was released and came in at -0.1% against the consensus of 0.2% from 0.7% previously which was revised up to 0.9%. This measure slipped below the zero line against to the level of the February low at -0.1%. Capacity Utilization (May) was also released at this time coming in at 77.9% against an expectation for 78.1% from 78.0% previously which was revised up marginally to 78.1%. The number remains close to the two years high from December and the 80.0% mark. USDJPY moved from a low of 110.408 to 110.648 following the data release.

US Michigan Consumer Sentiment Index (June) was 99.3 against an expected 98.5 from a previous 98.0. The March reading was a record high for the index at 102.0 and the data is showing the number holding under the 100.0 level since. The data came in above expectations for the second month in a row showing consumers are financially confident. GBPUSD moved higher from 1.32599 to 1.32976 after the data release.

  • EURUSD is down -0.10% overnight, trading aroun1.15941.
  • USDJPY is down –0.13in the early session, trading at around 110.500
  • GBPUSD is down -0.03% this morning trading around 1.32708
  • Gold is down -0.10% in early morning trading at around $1,279.68
  • WTI is down -0.62% this morning, trading around $63.76

This article was written by FxPro

FOMC Meeting Results in a Weaker US Dollar Against the Majors, Global Stocks Trade Lower

The move had been fully anticipated by markets and so did not come as a big surprise. The committee cited a solid growth outlook and greater confidence that inflation is converging on target as supporting their decision. The End of year GDP forecast was raised to 2.8% from 2.7% and the FED is strongly committed to the 2% inflation target. The USD reacted by strengthening against other currencies but this moved was faded with the USD now weaker against EUR, GBP, and JPY than when the rate decision was announced. US stocks initially moved higher but again the move was faded and they closed in the red.

UK Consumer Price Index (May) was 0.4% (MoM) and 2.4% (YoY) against an expected 0.4% (MoM) and 2.5% (YoY) from 0.4% (MoM) and 2.4% (YoY) previously. Core Consumer Price Index (YoY) (May) was 2.1% against an expected 2.1% from 2.1% prior. Producer Price Index – Input (May) was 2.8% (MoM) and 9.2% (YoY) against an expected1.6% (MoM) and 7.6% (YoY) from 0.6% (MoM) and 5.6% (YoY) previously. Retail Price Index (May) was 0.4% (MoM) and 3.3% (YoY) against an expected 0.4% (MoM) and 3.4% (YoY) from 0.5% (MoM) and 3.4% (YoY) previously. These data points showed CPI holding steady, with the yearly number above the Bank of England’s 2% target since March of 2017 due to the change in the value of the pound after Brexit. The BOE is factoring this data into their meeting next week and it is their belief that inflation is likely to move back to 2% in 2018 in light of Brexit headwinds. Producer Prices have continued to increase with big beats against the expected numbers. GBPUSD moved lower from 1.33349 to 1.33110after this data was released.

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Eurozone Industrial Production (Apr) was released coming in at -0.9% (MoM) and 1.7% (YoY) against the consensus for -0.5% (MoM) and 2.8% (YoY) from a prior of 0.5% (MoM) and 3.0% (YoY). This data extended its decline with the monthly figure slipping back under zero after rising last month. The EURUSD moved higher from 1.17390 to 1.17695 following this data release.

US Producer Price Index ex Food and Energy (YoY) (May) was 2.4% against an expected 2.3% from a previous reading of 2.3%. This data beat the expected number of 0.1% this month. The FED will be analyzing this data for developing trends in consumer inflation. EURUSD moved higher from 1.17584 to 1.17816 after this data release.

  • EURUSD is up 0.09% overnight, trading aroun1.18020.
  • USDJPY is down –0.23in the early session, trading at around 110.080
  • GBPUSD is up 0.11% this morning trading around 1.33896
  • Gold is flat in early morning trading at around $1,299.30
  • WTI is down -0.14% this morning, trading around $66.44

This article was written by FxPro

Markets Take a Breath Ahead of the FOMC Rate Decision this Evening

In an interview with FOX News, US President Trump suggested that there will be additional tariffs imposed on China on Friday focussed on Chinese agricultural products. Chinese stock markets are down as a result but most other markets are steady today ahead of the FOMC Rate Decision to be announced later. During the same interview, the President said that “War Games” would be suspended whilst negotiations are ongoing with North Korea in a show of good faith. He also made the comment that the Iran deal was worse than NAFTA, highlighting the dire situation for the trade agreement in North America. USDCAD is higher trading above 1.30000 at 1.30200.

Data published on Tuesday once again confirmed a positive sentiment in the U.S. whilst Europe continues to slow down. In Britain, average hourly the earnings growth rate fell to 2.8% 3m/y from 2.9% from a month earlier. This is worse than expected and confirms the trend for further decreased this year. Unemployment’s claims data indicated a pleasant surprise but the markets are now paying much more attention to inflation rates. The data caused another round of GBP weakening.

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The business sentiments index data from Germany and the ZEW data for the eurozone were also noticeably lower than expected. The index for the eurozone fell sharply from 2.4 to -12.6. This is a very abrupt transition from optimism to pessimism. In this case analysts, on average, expected to see a number close to zero. Recent developments around foreign trade, the Iran Nuclear Deal and the political situation in Italy have noticeably eroded sentiment. Meanwhile, inflation growth and the slowdown of the European economy has resulted in pressure on the assessment of current conditions.

However, data from the States was above expectations with annual total CPI accelerating to 2.8%. This is the highest rate in more than 6 years and is another signal in favor of the Fed’s decisive steps to curb inflation. The increase was likely caused by an increase in gasoline prices, the weakening of the dollar over the past year and strong labor market conditions.

The publication of such strong statistics allowed the dollar to turn to growth in the afternoon in anticipation of tomorrow’s meeting of the FOMC.

  • EURUSD is up 0.04% overnight, trading around 1.17498.
  • USDJPY is up 0.18% in the early session, trading at around 110.563
  • GBPUSD is down -0.04% this morning trading around 1.33668
  • Gold is flat in early morning trading at around $1,295.70
  • WTI is down -0.11% this morning, trading around $65.9

This article was written by FxPro

Global Stocks Rise as Progress Made in Singapore Between Trump and Kim

It is not yet known what progress has been made on denuclearisation, with a press conference scheduled for 06:30 GMT. USDJPY advanced higher to 110.490 overnight with support at 110.125. Markets are positioning ahead of tomorrow’s FOMC and Thursday’s ECB meetings when volatility should pick up.

Markets were in a risk on mode yesterday with Stock markets higher following the G7 summit. The gains were small at the beginning of a busy week for markets. The FX markets painted a different story as USDCAD rose to the 1.30000 level with Canadian PM Trudeau saying that they are preparing retaliatory measures as the relationship between the allies breaks down. The USD strengthened as the G7 passed much as expected to postpone the worst fears of the market.

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UK Industrial Production (YoY) (Apr) was 1.8% against an expected 2.7% from a previous 2.9%. Industrial Production (MoM) (Apr) was -0.8% against an expected 0.2% from 0.1% previously. Last month this data was flat but it disappointed expectations and missed by around 1%. Manufacturing Production (YoY) (Apr) was 1.4% against an expected 3.1% from 2.9% previously. Manufacturing Production (MoM) (Apr) was -1.4% against an expected 0.3% from -0.1% previously. This figure has missed expectations and fallen under the zero mark showing a contraction on the monthly number. The negative impact from Brexit is continuing to plague the economy as orders are delayed and production postponed. GBPUSD fell from 1.34274 to 1.33602 pairs can move because of this data release.

  • EURUSD is down -0.11% overnight, trading aroun1.17689.
  • USDJPY is up 0.24in the early session, trading at around 110.302
  • GBPUSD is down -0.07% this morning trading around 1.33639
  • Gold is down –0.21% in early morning trading at around $1,297.70
  • WTI is up 0.15% this morning, trading around $66.16

This article was written by FxPro

Poor British Statistics Add Pressure on Sterling

The manufacturing industries, strong indicators of economic activity, lost 1.4% during the same period. The growth rate for the last year slowed from 2.9% to 1.8% and 1.4%, respectively. After such disappointing data, Sterling was subjected to a serious sale, losing 0.6% in less than two hours to trade down to the 1.3350 area hitting one-week lows.

Such weak indicators indicate that the UK economy lost growth momentum even without the Bank of England having to raise rates. The earlier reported spike was based on a sharp weakening of GBP after the referendum on Brexit. This effect is now diminishing leaving only negative side effects among them near-record foreign trade deficit. The deficit grew to 14 Billion in April, according to data also published today, which is the second minimum value in history.

Additionally, we saw weak data for the construction activity. After a fall of 2.3% in March, it has only marginally recovered to 0.5% against an expected 2.4%. Following these data releases the estimation of growth of the economy for three months up to May from NIESR did not reach expectations, pointing to a sluggish 0.2% growth.

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It is very likely that this will not be the last of disappointing news from Britain. Tomorrow the markets will pay attention to UK employment data. A series of weak data, including today’s, noticeably reduces expectations from the labor market, but can further pressure the British currency if it fails to present a positive outcome.

This article was written by FxPro

Markets Indecisive After the G7 Meeting Fails to Make Progress, US-North Korea Summit in Focus

With the US rejecting the communiqué as predicted, the market is directionless and focusing now on the US/North Korean summit tomorrow. Today’s economic calendar is light and unless the market finds direction traders may wait until the outcome of the Singapore Summit is understood and the results of the FOMC and ECB meetings, on Wednesday and Thursday respectively, are revealed. Bitcoin fell after the Conrail exchange was hacked over the weekend. The Cryptocurrency is trading around 6800.00 after the South Korean exchange fell victim to the theft of NPXS, NPER and ATX coins.

Canadian Housing Starts s.a (YoY) (May) was released coming in at 196K with an expected number of 218K from a previous 214K last month which was revised up to 217K. This data failed to beat expectations this month and has now dropped below the 200K level. The previous data was revised up but this revision is wiped out by the miss. USDCAD rose from 1.29768 to 1.30385 after this data.

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Canadian Unemployment Rate (May) came in as expected at5.8% against a previous 5.8%. This data is remaining static at the current level which is close to the lowest levels seen since 2008. Participation Rate (May) came in at 65.3% against an expected 65.4% from 65.4% prior. The participation rate is now at a new low showing that there are fewer participants in work or looking for work. Net Change in Employment (May) was -7.5% against an expected 17.5K from a prior -1.1K. The Net Change in Employment data has dropped under zero as employment contracts which is negative for the economy. USDCAD fell from 1.30385 to 1.29720 following this data release.

Baker Hughes US Oil Rig Counts was released with a headline number of 862 up 1 from last week’s number of 861. As this number creeps higher more and more rigs are coming into operation increasing the supply of oil onto the market and adding downward pressure on prices. WTI Oil was flat on the week as the rise in rig counts increased signaling additional supply in the US market but the price is at the lowest levels in two months.

  • EURUSD is up 0.23% overnight, trading aroun1.17941.
  • USDJPY is up 0.24in the early session, trading at around 109.762
  • GBPUSD is down -0.06% this morning trading around 1.34010
  • Gold is up 0.03% in early morning trading at around $1,298.08
  • WTI is down -0.11% this morning, trading around $65.48

This article was written by FxPro