Euro on the move

Daily Analysis - 05/07/2018

FOMC minutes and NFP

euro-jump


Today’s focus will be on FOMC minutes later this evening and tomorrow’s all-important US employment data. Meanwhile. The British pound will be closely watched as on Friday, Prime Minister Theresa May attempts to thrash out Brexit details with her cabinet at Chequers.

EURUSD jumps


The euro got a boost on the prospect of earlier-than-anticipated monetary tightening. A report by Bloomberg said that “Some European Central Bank policy makers are uneasy that investors aren’t betting on an interest-rate hike until December 2019, according to people familiar with the matter. A move in September or October next year is on the cards. EURUSD rose to near 1.1710 early in European session trading before reversing.

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Trade War enters new phase


On Friday, the trade war between the United and States and China will be escalated with the imposition of new tariffs. The US will start a 25% rate increase on various machinery goods valued at USD34bn, while China will counter with other measures.  USDCNH is currently steady around 6.6480 after dropping off a high of 6.7330 hit earlier this week.

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Copper under pressure


Copper hits a 9-month low as the market priced in weaker demand in top consumer China, amid the trade spat with the United States. The July futures contract dipped to 2.8090 yesterday. Industrial metals rely on China a lot and the tariffs will cut into their profit margins.

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