We start off the week shifting focus from the Central Bank and back onto the trade dispute.
Following last week’s tariff threats from Trump – to the tune of $300bn worth of imports – China has responded with the Chinese Yuan dropping to its weakest levels on the dollar in over ten years due to “protectionism”.
We expect to see the game of ping pong continue, with both countries’ currencies and markets in the cops, which will no doubt have some knock-on effects around the globe.
The implications that a tense trade war can have on the global economic outlook may very well circle us right back into the Central banks and a reassessment on the policy on the dovish side. The US is now beginning to price in an expected 100 basis point cut by 2020, 25bps more than previously assessed last week.
The dispute is going to need to be closely monitored, so make space, alongside the Boris Johnson watch.
Today, PMI data is released throughout the day, with Europe up at 09:00 and the US up at 13:00 BST. The startled market will trade hesitantly around these with the shadow of the trade war looming over.
Market sentiment is likely to be very volatile going forward. Get in touch this week to discuss the implications for your business and to put in place an effective currency strategy.
Have a great week ahead.