Daily Market Update

Dollar flat as world watches for U.S.-China tariff deadline

May 09, 2019

The U.S. Dollar is as quiet as global markets, which at the moment are just eagerly waiting on any news regarding trade-talks progress between the U.S. and China officials.

Overview

Apparently, things are not going smoothly since it has been announced that there were major revisions by Chinese policymakers who would want to see a different approach altogether to tariff negotiations. President Donald Trump had added pressure over the weekend by making Friday the deadline for a deal to be ready, otherwise, more trade costs would be added. Thus far, many traders are hoping for an 11th-hour deal to come through.

Data-wise, things are relatively consistent in the U.S. with this morning’s Producer Price Index docket. PPI excluding food and energy prices rose by 0.4% in April, beating an estimate of 0.2%. Nevertheless, Final Demand is below the expected monthly average of 0.3% at just 0.3%, meaning business activity is not stellar. Expect safe-haven currencies and assets to fluctuate upward, especially if headlines as the day progresses turn sour on the prospects of a cohesive trade agreement.

 

What to Watch Today…

  • No major events scheduled for today.

Complete Economic Calendar can be found here.

 

JPY

The Japanese Yen is up by 1.6% thus far in May, improving naturally as a staple of safety in a fearful market. Chinese trade turmoil has only been feeding the Yen this week as the lack of clarity and details keep all global tense and uncertain. One major effect has been the plummeting of the MSCI Emerging Markets Currency Index, which has now hit its weakest point in four months.

The two biggest economies duking it out have a negative trickle-down effect. Nothing is damaging the country at the moment and the Bank of Japan will not meet until June 20th to provide any signs of loosening policy that could bring the currency’s value down.

GBP

The pound continues to be punished by the anxiety that is the daily torture of failed attempts to define Brexit. More importantly, a political breakthrough may be coming, but by force, since next week the Conservative Tories will meet to talk to Prime Minister Theresa May about her future within the party and perhaps immediately as Prime Minister.

Coined as the “1922 Committee,” she will defend her position and do her best to discourage a change in party rules that would allow a vote to oust the party leader every 6 months instead of a full year. This means that her earlier survival would not suffice and her PM power comes to an end.  Clearly, things are not swelling in the U.K. and too much is still up in the air.

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