Renminbi weakens beyond 7 (first time since 2008)
Trump blames China for currency manipulation and pressures FED
UK Service PMI beats estimates
US ISM Non-Manufacturing PMI disappoints
Very interesting and eventful Monday session with the US and China trade-war escalation in focus. Things have started to look bad after last week decision by the US government to impose additional tariffs on Chinese imports. The market was very much shaken by an unexpected negative development suggesting that an agreement between the two economic giant is far from being reached. Therefore, the market needs to price in an escalation and the fact that there might be a long period of uncertainty. On the other side, a new vicious cycle seems to be materialising as traders are now positioning for a 50 bbp rate cut in September (implied odds are now 21% vs 0% prior). The trade war is the elephant in the room and will likely drive sentiment and expectation about the FED next policy decision for the remainder of the month. Eyes on Trump twitter account.
Global Equities slumped as the sell-off continues from last Friday. Sp500 drops more than 2% retesting the 13th June low as US-China trade war escalates.
Mixed reaction in the FX space with EUR flying back to 1.12340 amid USD weakness fulled by expectations of more aggressive cuts by the FED and analyst looking at the possibility of a "Dollar Jawboning" scenario.
Crude Oil traded choppy, consolidating around $55 after last Friday drop. The perfect storm for Gold continues amid USD weakness and risk-off sentiment Global Yields slump, amid risk safe inflows ________________ EU Close
If you missed the morning briefing from the desk click HERE