Yesterday’s session saw the world’s two largest economies commence a two day meeting to revive trade negotiations. These talks however weren’t enough to halt new tariffs imposed by the US and China, which saw $16 billion worth of tariffs on each other’s imports. Economist estimate that for every $100bln of imports hit by tariffs, it would reduce global trade by around 0.5 percent. So far talks have yet to yield any break so we expect markets to continue to trade wearily.
The Jackson Hole Symposium kicked off yesterday and will continue to attract much attention. In previous years, the Fed’s Bernanke and ECB’s Draghi have used this event to announce significant policy shifts and for this reason, markets will monitor the event for updates that could impact markets. Fed Chair Jerome Powell is scheduled to speak today where markets will weigh in after Trump’s criticism this week of the Fed’s tightening policy. Trump was critical this week again of the central bank, stating he disagrees with the Fed’s policy because it could hurt the economy. Robert Kaplan, head of the Federal Reserve Bank of Dallas, brushed off the comments from the US President in an interview with CNBC yesterday, will Powell follow suit?
The Australian dollar bounced back in the Asian session after Malcolm Turnbull was ousted, with Scott Morrison becoming Australia’s 6th Prime Minister in 11 years. The AUD is up against all of its majors this morning.
Closer to home where the pound failed to rally in yesterday’s session after Dominic’s Raab’s no Brexit advice was poorly received. After throwing my eye’s over the documents, the lack of clarity was prevalent throughout which further suggests that the Tories themselves are unsure of life after Brexit. With just over 6 months to go before the deadline, it’s incredible to see government documents still being published with the word’s ‘could’ and ‘likely’ repeatedly used.
The pound fell against the euro in yesterday’s trade, opening up above .90 today and looking to target .9050. The bearish downtrend on cable continued through yesterday’s session however the pound has opened this morning a little stronger and back above 1.28.