The trade wars continue, and D-Day is looming. On Wednesday 9th July, Trump’s 90 day pause on tariffs comes to an end. There were threats overnight to countries without deals in place about not aligning with the growing BRICS bloc, who began a leader’s summit this weekend. What this reshaping of world trade means for the US and indeed other key partners and currencies is still not as clear cut as you might think.
Current rates
| Currency pair | Rate |
|---|---|
| eur usd | 1.1727 |
| gbp eur | 1.1580 |
| gbp usd | 1.3581 |
Rates correct as of 10:10am on Monday 7 July but may now have changed.
The Big 3
Three stories covering the latest developments in economies, currencies and borders.
Tariff pause ending with deals still not over the line
Trump announced yesterday that he would add an additional 10% tariff to any country aligning with “Anti-American policies of BRICS”. With the 90 day pause deadline expiring on Wednesday, the US is trying to strike trade deals with several potential partners. The resulting tariff decisions will then be implemented from 1 August. Regardless of the outcome, the rules-based trading system the US helped create is shifting and a possible result is more countries retreating into geopolitical blocks, given the BRICS group’s growing share of global GDP. The dollar strengthened by 0.2% on Trumps announcement.
Pound struggling despite uncertainty over the pond
The Dollar is actually trending higher despite the increase in trade-related uncertainty, putting pressure on the pound. It shows, we cannot expect the clear cut FX market relationships we saw in H1, in H2 and with strong domestic headwinds for GBP, following fears about the country’s debt, the outlook for GBPUSD this week isn’t positive.
Latest data shows US economy remains resilient
Data from later last week was much improved, compared to some of the patchy data produced in the previous tranche of data prints. NFP and unemployment figures painted a more resilient picture of the US economy. The suggestion, based on an increase of 147,000 jobs in Junne and an unemployment rate down to 4.1% is that the tariffs, and other headwinds are not causing employers to pull back in a big way.
Looking forward
Light week for data after a heavy one last week, but a few things worth noting.
- Tuesday: Australian Central Bank interest rate decision and commentary.
- Wednesday: US “reciprocal” tariffs set to expire for countries with no deal; the Fed releasing FOMC minutes; China, Mexico and Russia publish inflation data.
- Thursday: Brazil inflation data; US initial jobless claims.
- Friday: Canada June jobs data; France and Germany publish CPI.
Here’s what we’re talking to our clients about
We’re always here to support. Here are some of the conversations we’re having:
- A break for US Dollar sellers is here.
- What the tariffs mean for clients and trading partners.
- Starting off H2 with a keen eye on managing risk.
The contents of this article do not constitute financial advice and are provided for general information purposes only.