The United States Dollar is trading stronger for the fourth day in a row, as tariff talks and trade deals around the world continue to dominate headlines
Overview
Though the only remaining major economies without a new trade deal with the US, chatter around the August 1st deadline for the re-implementation of reciprocal tariffs continues. At his press conference announcing the US-EU deal, President Trump announced plans to impose levies of 15-20% on nations that did not secure specific agreements with the US. Meanwhile Administration officials Howard Lutnick, Scott Bessent, and Jamieson Greer are continuing their negotiations around the world – Lutnick, heading into his second day of meetings with the Chinese vice premier, suggested that another 90-day extension of the truce with China is likely which does confirm reporting from state outlets over the weekend. South Korea’s finance minister is set to meet with Bessent on Thursday, and Canadian PM Mark Carney said talks between the US and Canada are “at an intense phase.”
Outside of continuing trade chatter, focus for today and tomorrow will be on the Federal Reserve, set to announce the FOMC’s latest policy decision tomorrow afternoon. Though it’s highly unlikely that the Fed chooses to cut interest rates this cycle, extra scrutiny will be on Jerome Powell given the current tensions between the head central banker and the Chief Executive. Focus for traders should remain on any forward guidance and expectations for easing this year, but Powell will without a doubt face questions on the independence of the Fed given Trump’s push for dramatically lower interest rates. Markets also receive the PCE Deflator Index for June on Thursday, and a slew of US employment data on Friday morning.
What to Watch This Week…
- FOMC Interest Rate Decision, Wednesday 2PM
- PCE Deflator Index, Thursday 8:30AM
- Non-Farm Payrolls JUN, Friday 8:30AM
- Monex USA Online is always open
The complete Economic Calendar can be found here.
EUR ⇓
The single currency continues to be the worst performer in the G10 this week, sliding a further half a percent versus the Buck in early trading today. This brings losses for EUR close to two and a half percent through July. As the dust settles surrounding the EU-US trade deal, many European Union nations have expressed their displeasure with the deal and in the European Commission’s negotiation, and not without merit – negotiators were unable to achieve the 10% tariff rate they appear to have been targeting, and agreed to massive investment in the US economy to boot. Ursula von der Leyen, for her part, told reporters yesterday to “remember where we came from” given previous threats of 50% levies.
GBP ⇓
Pound Sterling, though outperforming its European peer, is still sliding against USD today, down a third of a percent from yesterday’s close. Mortgage approvals across the UK did increase last month, but traders remain wary of stagnant-at-best economic growth and have brought Cable down more than three and a half a percent from its YTD highs hit at the beginning of this month. A report from the International Monetary Fund published this morning said the UK economy is likely to outperform the European Union economy over the next two years, but will lag behind its Canadian and US peers, and the UK may face a relatively substantial demand shock.
