- The primary macroeconomic impact on financial markets over the past week has been the processing of the G20 announcement that trade negotiations between the US and China would resume after a trade truce was called.
- This has seen the “risk on” theme re-energize, highlighted by global equity indices surging to new multi-month highs and in the case of the three major US equity averages (S&P 500, NASDAQ 100 and the Dow Jones Industrial Average) to new record highs, alongside the UK FTSE 100.
- Moreover, the “commodity currencies”, the Australian, Canadian and New Zealand Dollars have posted significant gains for the start of July, again buoyed by the trade talks and global “risk on”.
- USD: A mixed tone, weaker against the “risk” currencies (AUD, NZD, CAD), but strengthening against the Euro and GB Pound.
- EUR: A weaker Euro across all the major currencies this week amid deteriorating data in Europe and ongoing concerns regarding an even more dovish ECB, with core European bond yields collapsing to historic lows.
- JPY: Neutral this week, USDJPY little changed for the week.
- GBP: Broadly negative, with ongoing no deal Brexit concerns and weaker UK economic data, but the Pound is higher for the week versus the Euro.
- AUD: hitting multi-month highs over the past week versus the US Dollar and surging against the Euro and Sterling (as is the New Zealand Dollar) assisted by the US-Simo trade truce.
- CAD: Still strong, despite the correction lower in Oil, reflecting the far more dovish view of the US Fed.
The key focus today WILL be the US Employment report, see our guide to trade this event with Non-Farm Payroll Forex Strategies, with USDJPY and USDCAD often big movers.
Spotlight for FX into next week
- 5th July – US Employment Report
- 8th July – German Industrial Production
- 9th July – Fed Chair Powell speaks, RBNZ Governor Orr speaks
- 10th July – China CPI, UK GDP, Bank of Canada Rate Decision, FOMC Minutes
- 11th July – German and US CPI
- 12th July – China Trade data
See more from Steve Miley at FXExplained.co.uk