President Trump walks back tariffs on Mexican imports, risk-on sentiment returns
Kathryn Garvey | June 10, 2019
Monday: Italy Industrial Production MoM, UK Industrial Production and Manufacturing, CA Housing Starts
Tuesday: UK Jobless Claims Change, NFIB Small Business Optimism, PPI Final Demand MoM
Wednesday: MBA Mortgage Applications, CPI
Thursday: German CPI, US Jobless Claims
Friday: US Retail Sales, Industrial Production
June 10, 2019
EUR/USD 1.1304 GBP/USD 1.2673 USD/CAD 1.3268 AUD/USD 0.6964 USD/JPY 108.58 USD/CNH 6.9489 USD/ILS 3.5844 USD/MXN 19.2404 USD/CHF 0.9911 USD/INR 69.6550
USDThe dollar gained this morning after the President walked back the tariffs on Mexican imports which were slated to go into place today. The cancellation happened after Mexico pledged to offer tougher immigration enforcement at the US Southern border – specifics of the deal were not released. The Mexican peso jumped 2% on the news. The deal clears a path for the USMCA trade agreement to move forward.GBPThe pound is lower this morning and on track for its biggest daily slide in a month following data that GDP in the UK fell by .4% in April. The pound dropped by .6% and concerns about the health of the UK economy surfaced. Conservative leaders will launch their official campaigns for Prime Minister this week. The pound remains pressured on Brexit uncertainty as all leading candidates pledged to leave the EU by 10/31 with or without a deal.EUR
The euro is slightly weaker this morning as dictated by the USD gains. Italy remains a source of uncertainty and volatility with the center of debate on the country’s opposition to EU’s fiscal rules.CAD
The resolution between the US and Mexico helped CAD as well as the return of global risk-on positions. Oil prices have remained supported providing a boost for the loonie. CAD strength hit a three-month high in Asian hours.ASIA/PACIFIC
The Bank of Japan’s Governor Haruhiko Kuroda told Bloomberg that the central bank could deliver more monetary stimulus if necessary but that it doesn’t need to act now. The comments showed that the BOJ is starting to plan for protective actions to take as the US-China trade war continues.
The Chinese yuan slipped to the weakest this year after imports fell 8.5% May. Exports rose 1.1% unexpectedly though some suspect the uptick could be a symptom of front loading shipments to avoid higher US tariffs.
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