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US Dollar Weakens on Trade War Concerns, Softer UK Growth Weighs Down Pound

Pound News: Widening Trade Deficit Weighs on UK Outlook

Confidence in the Pound (GBP) deteriorated further at the start of the week as the latest UK data proved distinctly disappointing in nature.

Particularly concerning was a weaker-than-expected NIESR gross domestic product estimate for the three months to May, which indicated a smaller uptick in growth than forecast.

Any weakening of today’s wage growth data could encourage further Pound selling as markets continue to assess the odds of an August Bank of England (BoE) interest rate hike.


Euro News: Weaker German Sentiment Forecast to Weigh on EUR Rates

While the US threatened the EU with possible tariffs on automobiles over the weekend this failed to keep the Euro (EUR) down on Monday.

Markets remain hopeful ahead of Thursday’s European Central Bank (ECB) policy announcement, limiting the downside bias of EUR exchange rates.

However, if the German ZEW economic sentiment survey weakens in line with expectations this could dent the single currency.


US Dollar News: Trade War Fears Limit US Dollar Demand

The increasingly belligerent protectionist rhetoric of the Trump administration put the US Dollar (USD) under pressure yesterday.

With the threat of a trade war mounting investors remain concerned about the negative impact that this could have on the US economy.

Even so, a stronger showing from this afternoon’s US consumer price index data could offer USD exchange rates a solid rallying point.


Canadian Dollar News: CAD Exchange Rates Slump on Worries of Fresh US Tariffs

Rising tensions between the US and Canada over the Canadian dairy industry prompted Canadian Dollar (CAD) exchange rates to weaken.

Investors are concerned that the trade relationship between the two countries could sour further, potentially leading to the imposition of additional US tariffs on Canadian exports.

Unless trade tensions ease, or oil prices show a rebound, the mood towards the Canadian Dollar is likely to remain bearish.


Australian Dollar News: RBA Comments to Put Fresh Pressure on ‘Aussie’

Market risk appetite persisted on Monday in spite of the increasing threat of a US-instigated global trade war.

This kept the Australian Dollar (AUD) on a positive footing against many of the majors at the start of the week, even though confidence in the domestic outlook remains muted.

Comments from Reserve Bank of Australia (RBA) Governor Philip Lowe could put AUD exchange rates under pressure, however, if he maintains a dovish policy outlook.


Upcoming Data

Tuesday, 12 June

09:30     UK Average Weekly Earnings

10:00     German ZEW Economic Sentiment Survey

13:30     US Consumer Price Index


Michael Vaughan

Currency Dealer

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