The U.S. Dollar stuck to familiar ranges overnight after counterparts hit the brakes and markets rose on news that China and the U.S. resumed talks and are closer to making a deal.
Nevertheless, there is mixed news on the trade front as European Union leaders prepare to deal with the potential $.0 billion of new tariffs placed on Airbus products, a measure by the U.S. administration to counter subsidies that they claim are against fair competition. A pre-existing $21.0 billion is already being negotiated, thus EU officials said additional higher costs will be met with retaliation.
On the other hand, tariffs that were proposed to be placed on Mexican products are now “off the table,” per President Trump statements yesterday since the country has responded with broader border patrol cooperation in the last month. Data-wise, the buck is not getting much help as ISM Manufacturing data showed yet another deteriorating trend with last month’s figuring coming under the forecast. With no numbers today, markets could remain mostly quiet ahead of ADP Employment and Factory Orders tomorrow as well as the July 4th holiday.
What to Watch Today…
- No major events scheduled for today.
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The Euro may start floundering again after Markit Purchasing Managers Index data revealed the ninth straight month in which orders came in lower, a cause of worry for troubled companies. This is the lowest PMI since 2013, coming in contracting when at least some expansion was expected.
It is clear that investment is slow and businesses are not spending at the pace they should for real growth. This could exacerbate the European Central Bank’s rush to act in order to help such a doubtful environment. The Euro is highly dependent on better data and this was not a good start for July.
Sterling also was a victim to the revelation of dire data on the PMI side, its contraction the worst in 76 months. With Brexit concerns growing, no trade deal in sight, and ongoing decay in its indicators expect Pound to remain subdued and under intense pressure. Fundamentals stayed strong for the U.K. economy for a while post-Brexit referendum, but now the process is showing it has done real damage to exports and longer-term investment.