Talking Points:
- Markets remain unsettled as Donald Trump is scheduled to give an announcement on EU trade at 1745 GMT
- NFP and US unemployment key figures to watch out for today
- GBPUSD manages a small rebound on the back of USD weakness
Global financial markets were sent into a frenzy on Thursday afternoon after Donald Trump tweeted that the US would implement further tariffs on Chinese products, effective on September 1. US and Chinese equities took the biggest hit with the Dow Jones losing more than 460 points just after the announcement and closing the day 2.2% lower, whilst the Chinese CSI 300 dropped 3.3% just after Trump’s tweet, closing the day more than 4% lower. European stocks also took a hit as the FTSE 100 dropped 1.36% and the Dax lost 1.79%.
USD pairs also remained volatile overnight with the dollar seeing some sell-off pressure towards the end of the US session as trade fears were reignited, before recovering its losses as Donald Trump signalled he would make an announcement on Friday afternoon regarding trade with the European Union.
US Dollar May Rise on Trump EU Trade Announcement – Dimitri Zabelin
EURUSD managed to find some strength at the start of the morning session as the pair was testing 1.1110 after falling below the 1.1150 level on Wednesday. Retail figures out this morning showed that retail sales increased in the Eurozone in the month of June
GBPUSD saw some recovery as construction PMI figures manage to rebound from the previous month, despite construction output remaining weak in the month of July coming in at 45.3, below market expectations of 46. Services and composite PMI figures will be released on Monday with expectations that both figures will have recovered slightly on the back of the summer months. The pair remained around 1.2115 after dipping below 1.2100 on Thursday, but the recovery is mostly due to dollar weakness.
Apart from Donald Trump’s trade announcement due to be given at 1745 GMT, NFP data out later today will also bring some volatility to USD pairs, with expectations of an increase of 169k in the month of July, after ADP figures released earlier in the week saw an increase of 156k.
Join our analyst Christopher Vecchio at 1215 GMT for Live coverage of the NFP data release
Donald Trump has accused the European Union in the past of unfair trade practices against the United States and has threatened to impose tariffs on European cars and increase the number of levies on billions worth of European goods. As late as the beginning of July, Trump threatened to impose tariffs on $4bn of European goods which include whiskey, cheese and olives, as a possible retaliation for the ongoing trade dispute between airline rivals Airbus and Boeing. Tariffs on European cars will be a big blow for the already struggling German economy as industrial production and growth has been slowing in recent months.
Recommended Reading
Eurozone Debt Crisis: How to Trade Future Disasters – Martin Essex, MSTA, Analyst and Editor
KEY TRADING RESOURCES:
- Just getting started? See our beginners’ guide for FX traders
- Having trouble with your strategy? Here’s the #1 mistake that traders make
- See our Q3 forecasts to learn what will drive FX the through the quarter.
--- Written by Daniela Sabin Hathorn, Junior Analyst
To contact Daniela, email her at Daniela.Sabin@ig.com
Follow Daniela on Twitter @HathornSabin
