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Trade War Jitters to Fuel Safe Haven Demand and Overshadow the Stats

Bob Mason

Earlier in the Day:

The economic calendar was on the lighter side through the Asian session this morning. Stats were limited to New Zealand July trade figures.

Outside of the numbers, the Asian market reacted to the escalation in the U.S – China trade war on Friday and Trump’s Twitter tantrum.

Updates from the G7 Summit also influenced through the early part of the session.

For the Kiwi Dollar

The trade deficit widened from a revised NZ$4,980m to NZ$5,460m, year-on-year, in July. Month-on-month, the trade balance slumped from an NZ$331m surplus to an NZ$685m deficit.

According to NZ Stats,

  • Goods import values increased by NZ$173m (3.1%), while the total value of goods exports fell by NZ$309m (5.8%)

The Kiwi Dollar moved from $0.63475 to $0.63498 upon release of the figures. At the time of writing, the Kiwi Dollar was down by 0.70% to $0.6360.

Elsewhere

At the time of writing, the Japanese Yen was up by 0.44% to ¥104.93 against the U.S Dollar, while the Aussie Dollar was down by 0.75% to $0.6705 at the time of writing.

The Day Ahead:

For the EUR

It’s a relatively busy day ahead on the economic calendar. Germany’s Ifo business sentiment figures are due out later this morning.

Last week, Germany’s private sector PMI surveys revealed a marked deterioration in optimism, suggesting EUR negative numbers.

An escalation in the U.S – China trade war last Friday will not have helped sentiment mid-way through the 3rd quarter.

While the numbers are EUR negative, the Dollar could be in for another bashing should any updates from the G7 Summit suggest more tantrums to come.

At the time of writing, the EUR was up by 0.01% to $1.1145.

For the Pound

It’s a quiet day ahead on the data front. There are no material stats due out of the UK, with the UK on holiday.

The lack of stats will leave the Pound in the hands of Brexit chatter and further MP reaction to Boris Johnson’s brief visit to Europe.

Ultimately a lack of progress leaves Johnson exposed and Corbyn will be looking to garner the necessary support to win a vote of no-confidence next week.

Brexit chatter from the G7 Summit and Johnson’s inquiry into the legalities of shutting down Parliament for 5-weeks also needs consideration.

At the time of writing, the Pound down by 0.02% to $1.2263.

Across the Pond

It’s a relatively quiet day on the economic calendar, but not without influence.

Following last week’s private sector PMI numbers that revealed a first contraction in the manufacturing sector since Sep-09, we can expect plenty of sensitivity to today’s numbers.

July durable goods orders are due out later this afternoon. Weak numbers would further support the market’s pricing in of a September rate cut. Throw in Trump’s Twitter tantrums and effects on the Dollar and the U.S President may have found a way to sink the Greenback without the help of the FED…

Outside of the numbers, the markets will look for any chatter on trade and also news from the G7 Summit.

At the time of writing, the Dollar Spot Index was down by 0.02% to 97.619.

For the Loonie

It’s a day ahead on the economic calendar. There are no material stats due out of Canada. The lack of stats will leave the Loonie vulnerable to any further slide in crude oil prices.

Market risk sentiment will influence on the day.

The Loonie was down by 0.23% at C$1.3314, against the U.S Dollar, at the time of writing.

This article was originally posted on FX Empire

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