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US-China Trade Tensions Flare Up with Mixed Impact on Risk-Sentiment

Pound News: Sterling Remains Unappealing amid Brexit Doubts

Last week’s brief surge in hopes that a Brexit deal was imminent now feels like a thing of the past, and the Pound continues to shed ground on broad doubts that cross-party talks will lead anywhere.

The Pound’s movement was a little quieter yesterday, but the British currency remained under pressure due to expectations that Brexit talks would fail, as well as concerns that UK political uncertainty will only worsen amid the approaching EU elections.

A slew of typically influential UK ecostats will be published today, including UK growth and production figures. These are unlikely to cause much Pound movement though, with market focus remaining on Brexit.

 

Euro News: Shared Currency Continues to Climb on Economic Hopes

Despite some stronger performance in rivals like the US Dollar, the Euro continued to see fairly solid demand yesterday and GBP/EUR tumbled lower as a result, with demand for the Euro supported by recent Eurozone ecostats.

Wednesday’s German industrial production data continues to lend the Euro support, as investors stay firm on the shared currency ahead of next week’s key German growth rate stats.

Today’s German trade balance data and French industrial production could cause some late-week Euro movement if the figures surprise investors, but the potential for further Euro gains may be limited ahead of next week’s data.

 

US Dollar News: USD Strength Limited despite Higher Safe Haven Demand

As US-China trade tensions worsened again yesterday, demand for safe haven currencies rose. While havens such as the Swiss Franc (CHF) and Japanese Yen (JPY) surged, the US Dollar’s strength was limited.

This was due to concerns that the US economy would be hit by trade uncertainty, as well as the afternoon’s weaker-than-expected US wholesale inventories data.

The week will be rounded off by US inflation rate stats today. If US inflation is higher than expected, the US Dollar could see further strength as Federal Reserve interest rate cut bets would diminish.

 

Canadian Dollar News: CAD Gains Limited amid Trade Jitters

The Pound to Canadian Dollar exchange rate has seen notable losses this week so far, and looks to be on track to end the week much lower. However, the pair’s losses slowed yesterday as investors were hesitant to move into the Canadian Dollar.

The Canadian Dollar’s appeal became limited amid fresh US-China trade tensions, and some mixed trade data from March.

This week’s most influential Canadian dataset will be published today. If the April job market report beats expectations, investors may be more confident in the Bank of Canada’s (BoC) economic optimism and the Canadian Dollar could strengthen further.

 

Australian Dollar News: US-China Trade Jitters Leave AUD Slumping

While the Pound has fallen against most major currencies this week, the Pound to Australian Dollar exchange rate has recovered from this week’s lows as the latest rise in US-China trade tensions leaves the Australian Dollar weak.

US President Donald Trump has criticised China for reportedly reneging on concessions. As China is Australia’s biggest trade partner, the refreshed trade tension between the US and China is leaving the Australian Dollar unappealing.

The Australian Dollar may react slightly to this morning’s statement on monetary policy from the Reserve Bank of Australia (RBA), but overall the ‘Aussie’ is more likely to react to US-China trade developments.

 

Upcoming Data

 

Friday, 10th May

02:30    RBA Statement of Monetary Policy

07:00    German Trade Balance

07:45    French Industrial Production

09:30    UK Growth Rate

09:30    UK Manufacturing and Industrial Production

09:30    UK Construction Output

09:30    UK Business Investment

09:30    UK Trade Balance

13:30    Canadian Job Market Report

13:30    US Inflation Rate

 

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To keep up to date with the Euro, visit the Euro blog in our Currency News section.

 

Arron Morris

Senior Currency Broker

adm@fcgworld.co.uk

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