Home Daily Commentaries Risk event this week is the G7 summit and Trump Tweets

Risk event this week is the G7 summit and Trump Tweets

Daily Currency Update

All eyes were on US non-farm payrolls on Friday. Although President Trump may have spoilt the surprise, the data was still a big beat and the US dollar strengthened a little on the news. The wages data was also strong and showed that average hourly earnings were up 0.3% vs. 0.2% expected. The dollar strength was most tangible in the USD/JPY cross, the pair rallying from 109.10 to 109.75. It was less tangible vs. the likes of the euro and pound, perhaps as investors offered the fact (having bought the rumor following Trump’s tweet).






The trade war rhetoric has been an ongoing one over the weekend. G7 ministers met, and the EU, China, and Canada took the chance to make it very clear they were not happy by the decision of the US. There has not been too much of a reaction in currency markets, but the story is likely to bubble away in the background all week and so could have an impact on currency markets at some point this week. Watch this space.  Markets will be keenly attuned to commentary from President Trump as he addresses the G7 summit with clues regarding protectionist trade policy dominating risk demand.





The docket for US data is looking a bit thin this week with ISM Non-Manufacturing PMI being the most significant release of the lot. The ongoing trade war, Trump tweets and political events in Europe will likely be the key drivers.

Key Movers

The CAD lost more than 0.25% after the US employment reports as USDCAD climbed all the way to 1.3008, but it managed to recover and close below 1.2970. Uncertainty around NAFTA negotiations and the recent negative performance of Crude will continue to put downward pressure on the loonie. Trump is now talking about the possibility of pursuing separate NAFTA deals with Canada and Mexico, so we should expect more short-term volatility.







This coming Friday Canada will have the employment change, and unemployment rate announced. No economic data today or tomorrow so the loonie will likely take is cues from oil prices. WTI Crude is down 2% this morning trading at 65.75 per barrel.


EUR/USD opens stronger than it did on Friday but uncertainty surrounding the Italian political situation will still be influencing short-term moves. Snap elections have been avoided thanks to the confirmation of the 5S-League coalition government, but the market will probably remain concerned given the financial risks and tension this coalition brings into the EU.







The EURUSD traded within a 1.1617-1.1718 range and the next levels to watch for the start of the week are 1.1608 (support) and 1.1728 (resistance). Like the US data docket, it’s a bit thin this week. ECB President Draghi is speaking on Tuesday, but that’s about it as far as key economic releases are concerned for the EU.


It was a generally regular morning session for the most part on Friday as investors and traders geared up for the US non-farm payrolls data that afternoon. That said, GBP did get a bit of a boost from the release of better than expected UK Manufacturing PMI, which printed at 54.4 vs. forecasts for 53.5. GBP/USD was also pulled higher by a better bid EUR/USD that morning which broke back through the 1.17 figure.



The pound is steady this morning and opens at 1.3365 vs. the dollar. Data-wise, the focus this week turns to a series of UK PMI. A few MPC members are also due to speak throughout the next five days too. It isn’t a busy one on the data front, but that’s not to say it won’t be any less volatile compared to other weeks.


Despite an uptick in US labor market performance on Friday the Australian dollar remained flat into the weekly close and opened this morning firmly entrenched amid recent ranges. With a lack of domestic drivers steering direction investor’s attention turned to U.S markers for reaction Friday. Markets primarily set aside a dip in unemployment and a wage growth print that surpassed expectations offering little response to what was a distinctly strong read across the board.









Having maintained a narrow trading band through the last three weeks, the AUD appears poised for a break, although upside momentum remains hamstrung on approaches to 0.7590/0.76. Risk demand remains of focus short term as Trade concerns, and political uncertainty hangs over broader markets and dampens demand for emerging market and commodity-driven assets.







Attentions this week turns to a crowded macroeconomic docket and global trade developments. Markets will be keenly attuned to commentary from President Trump as he addresses the G7 summit with clues regarding protectionist trade policy dominating risk demand. Retail Sales will drive domestic direction, while Tuesday’s RBA rate announcement, Wednesday’s GDP print and Thursday’s trade balance report ensure there is a raft of drivers to watch through the week ahead.


The New Zealand Dollar slipped below its previous 0.7 level to open this morning at 0.6984. Spurred downwards by positive employment figures out of the US, the Kiwi was the unfortunate recipient of a resurgent Greenback which rose against most currencies.













The Impetus for the drop was a better than expected non-farm payroll report which had a few positive headlines. Both the jobs created and the unemployment rate beat expectations, leading to a strengthening of the USD. Across the Atlantic, the situation in Italy seems to have a resolution in sight, calming markets for the time being and allowing risk appetites to remain healthy and supporting the NZD. Closer to home, the Aussie cross rate remains relatively resilient with little movement either way. Australia now looks to the retail sales reading today and an RBA statement tomorrow, potentially signaling interest rate intent and is of keen interest to Australian traders.






Looking forward, domestically, the economic calendar remains bare with little to note. The market now turns to the developing headlines as an emboldened Trump looks to impose tariffs on key allies. The trade tensions have shaken markets in the western hemisphere and remain the focus of the week.

Expected Ranges

  • USD/CAD: 1.2861 - 1.2975 ▲
  • EUR/USD: 1.1648 - 1.1724 ▼
  • GBP/USD: 1.3300 - 1.3377 ▲
  • AUD/USD: 0.7568 - 0.7666 ▲
  • NZD/USD: 0.6977 - 0.7048 ▲