The euro/U.S. dollar (EUR/USD) currency pair was on standby on Wednesday morning, as investors positioned ahead of the anticipated meeting between US President Trump and European Commission President Jean-Claude Juncker.
It’s been a quiet start for traditional economic data, with a slight miss in U.S. existing home sales the only headline of note. That situation is likely to change as we move through the week though, with tomorrow’s European Manufacturing and Services PMI reports providing an up-to-date read on the Eurozone economy.
The U.S. dollar fell against major pairs on Friday after U.S. President Donald Trump tweeted that China and the European Union manipulate their currencies. Trade war escalation has reached the second phase at a time when American politics are having an identity crisis with the ongoing Russian interference during the 2016 elections. Steven Mnuchin will head to Buenos Aires to take part in the finance ministers G20 meeting with trade and monetary policies sure to be a topic of discussion.
Notwithstanding President Trump’s daily twitter condemnations (trade partners and the Federal Reserve drew his ire this morning), traders have started to look ahead to next week’s trade. The marquee economic events impacting next week’s FX market will likely be Australia’s Q2 CPI reading in Wednesday’s Asian session and Thursday’s ECB meeting.
The British pound/U.S. dollar (GBP/USD) currency pair broke down earlier on the back of a slightly disappointing UK wages data and after reports emerged that Prime Minister Theresa May could lose an important parliamentary vote on Brexit. Apparently, Labour will support a move from pro-European Tory MPs to keep the UK in a customs union with the EU if no trade deal is reached by January.
The dollar started the new week lower, supporting the major currency pairs such as the euro/U.S. dollar (EUR/USD) currency pair and poubd//U.S. dollar (GBP/USD) currency pair this morning. There wasn’t any fresh news out to impact the greenback, so its weakness can be attributed in part to profit-taking.
The U.S. dollar was higher across the board against major pairs on Friday. Trade war concerns rose heading into the weekend and the comments from U.S. President Donald Trump during the week sparked a rally of USD buying. Trump has been outspoken on NATO, trade and the Brexit deal while economic indicators and the US Fed have been supportive of the greenback.
A fresh wave of risk aversion swept across financial markets after the United States threatened to impose tariffs on an extra $200 billion worth of Chinese goods. This unfavorable move comes just days after the two countries slapped tit-for-tat tariffs on $34 billion worth of each other’s imports.