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Analysts Warn US-China Trade War May Not End This Year

Pound News: New Worst Levels for Sterling as No-Deal Brexit Fears Continue

Sterling saw mixed movement yesterday as investors remained hesitant to buy the British currency amid rising fears of a possible no-deal Brexit.

Yesterday’s UK services PMI from Markit came in higher than expected, but due to lasting concerns about future economic activity amid Brexit uncertainty, the Pound was unable to capitalise.

No notable UK data will be published today, leaving Pound investors focused on potential Brexit developments. Sterling is unlikely to advance without any optimistic Brexit news.

Euro News: EUR Gains on Rival Weakness despite Eurozone Economic Concerns

Despite a lack of supportive Eurozone data this week so far, the Euro was one of yesterday’s best performing major currencies. Investors bought the Euro due to weakness in its rivals the Pound and US Dollar.

Still, yesterday’s Eurozone data was generally concerning. Germany’s services PMI data came in lower than forecast due to negative impact from the poorly performing manufacturing sector, and the Eurozone’s latest investor morale data from Sentix hit its worst levels since 2014.

The resilience the Euro saw yesterday is unlikely to last as concerns about the Eurozone economic outlook persist.

US Dollar News: USD Sees Limited Upside from Safe-Haven Demand

Over the weekend, US-China trade war fears flared up significantly. Partially due to fiery rhetoric from US President Donald Trump, China allowed its currency to plummet and speculation is rising that US-China talks could completely collapse.

While risk-appetite declined, the US Dollar was pressured by domestic economic concerns and wasn’t helped by a disappointing US non-manufacturing PMI.

This week’s US economic calendar will be a little quieter. US economic optimism and job openings data will be published today, but trade tensions could remain in focus.

Canadian Dollar News: Trade War Fears Weigh on CAD

The Canadian Dollar is a trade-correlated currency, so news that US-China trade tensions had escalated again left the Canadian Dollar weaker yesterday.

No notable Canadian data will be published until tomorrow and Friday, which could leave the currency reacting mostly to global trade developments and rival strength today.

Australian Dollar News: ‘Aussie’ Bolstered by RBA Decision

The Australian Dollar was hit particularly hard by the worsening of US-China trade relations. As China is Australia’s biggest trade partner, the ‘Aussie’ plummeted as investors digested the trade news.

However, the ‘Aussie’ later benefited from the news that the Reserve Bank of Australia’s (RBA) kept interest rates on hold. The central bank also refrained from hinting at future rate cuts.

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