EU Daily Market Wrap - 17th May 2019

EU Daily Market Wrap - 17th May 2019

Today's Highlights

  • China may not be interested in continuing talks with the US

  • UK Labour quits cross-party talks on Brexit

  • Washington confirms 180-delay on EU/JPN Auto tariffs

Macro Review

The week concludes with trade talks likely to remain in focus as long as a deal with China is not written in stone or someone hacks and deletes Trump's account. I will admit he has tested my nerves a couple of times this week. Brexit remains also a core risk on the radar after UK Labour confirmed that "cross-party talks have gone as far as they can" and that they will oppose PM May Brexit deal. Talks are dead in the water and GBP really reflects the ongoing stall at Downing Street. The main reaction today saw USD strength across the board and a mild return of positive risk tone.

US Equities closed slightly in red after a mixed session amid confusion on trade. China announcement of loosing interest in closing a deal is definitely not positive for stocks, however this was later offset by the confirmation by the White House to delay tariffs on European and Japanese cars. However, the headline hit the tape already on Tuesday and therefore mainly priced-in. SP500 traded in relatively tight range throughout the session amid inconclusive developments on the trade front.

The FX space was dominated by another day of gains in the US Dollar, with the index touching the 97.8 level infra-day. EUR breached below the 1.1200 level after a range bound session. GBP heads into its 10th consecutive day of losses after Labour decision to quit Brexit talks, with the move also exacerbated by a stronger Dollar. On the Aussie, not a lot of space left between current levels and the December flash crash low. JPY paired back most of the overnight gains amid risk-on.

Crude was range bound after an initial pop higher supported by rising tension between US and Iran and Opec saying that they are "happy with prices around 70".Gold suffered another day of losses breaking back below 1280 amid Dollar strength and positive risk appetite. 

EU Close

If you missed the morning briefing from the desk click HERE

Hope you enjoyed the session.

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