USD - United States Dollar
The US dollar index bounced 0.34 percent this morning after an astonishing sell-off last week, where the US dollar had a setback versus major currencies, falling 2.2 percent versus the Kiwi dollar, 2 percent vs. the Swiss Franc, 1.8 percent vs. the Euro, 1.6 percent versus the Loonie, 1.2 percent versus the Aussie dollar, and 1 percent versus the British Pound.
The disappointing jobs report in the US made the worries about long-term US economic expansion worse and impacted the US dollar negatively. The possibility that the Fed will cut rates to anticipate a slowdown or recession might have become more certain. President Trump's manifesto that the US is enjoying, "…the best economy in our history" landed on some doubtful ears.
It is known that President Trump likes to use tariffs to negotiate and Mexico's Peso was under severe pressure last week along with a proposed US levy on Mexican exports. However, after the FX market close on Friday, President Trump tweeted, "I am pleased to inform you that The United States of America has reached a signed agreement with Mexico…" It is too early to tell whether the agreement reached Friday evening will lead to the lifting of the tariff threat in the future. Trump's decision of calling off planned tariffs was very welcomed by Republicans and others who advised that the tariffs would damage the U.S. economy, slow job growth, and interrupt a trade deal between Canada, U.S., and Mexico, known as the USMCA, which still needs lawmaker ratification.
China is under pressure after its imports dropped sharply last month. China's imports in May declined 8.5 percent from a year earlier, a very sizeable contraction since July 2016, when the expected number was only -3.5 percent. This is confirmation that the U.S.-China trade spat is taking a substantial toll on the Chinese economy. Furthermore, exports for the month came in at 1.1 percent, better than the expected decrease of 3.9 percent. The trade surplus came in at $ 41.65 billion from $13.83 billion in April, which was higher than the expected number of $22.3 billion. In general, Beijing is struggling to manage trade tensions with the US
Finance ministers and central bank governors were meeting in Japan, but they made little progress in addressing the fundamental problem of tit-for-tat tariffs, noting that world growth appears to remain low with elevated risk.
In Hong Kong, a proposed law, which would allow suspects to be extradited to mainland China for trial, has sparked anger in the population. Enormous crowds of demonstrators overflowed the city’s streets to protest this proposed law, which if passed, would expose citizens to mainland China’s legal system. The USD/HKD pair trade flat this morning at 7.8432.
1.3240 - 1.3340 ▼EUR/USD:
1.1298 - 1.1339 ▼GBP/USD:
1.2631 - 1.2718 ▼AUD/USD:
0.6958 - 0.6982 ▼NZD/USD:
0.6604 - 0.6646 ▼