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In the Zone
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Market Insight Commentary – Forex
Today's News Headlines
- The major news was the tariff on steel prices that Donald Trump announced yesterday, is this the start of a trade war? A trade war will likely be painful for the US as I am not sure they are in a position to win this one.
Market Insight Commentary – Indices
Market Recap
The economic data was packed yesterday and the market was anxiously waiting to see if the dollar would continue its march against all the other major currencies. The economic data did not move the market too much, but what transpired later on in the day was extraordinary and it resulted in an absolute rollercoaster ride.
After a rather hawkish testimony on Tuesday, Fed Chair Powell was slightly less hawkish yesterday, his testimony was rather contradictory on Tuesday and he spent most of yesterday back tracking slightly on those comments. He then ended his testimony by suggesting that 4 hikes, rather than 3 would be considered gradual – if he is going to try and shock the markets every time he opens his mouth, then his term is going to be filled with controversy.
The real roller coaster started when Donald Trump got hold of the microphone though, it has long been known that he has had it in for the steel industry. A press conference on tariffs was first called off early yesterday, which spent the dollar weaker. He then – out of nowhere – announced a 25% tariff on steel and 10% tariff on aluminium. This surprised the market and the result was extraordinary as we saw a selloff in equites and a strong dollar again.
The dollar then sharply reversed on fear of a trade war, the market will wait for more news today on this – although the details will only be released next week. There have been plenty of comments from the rest of the world especially from Germany, the EU and Canada. Both China and Australia have been quiet for now, perhaps waiting for the details next week. Trump is insistent that he righting a wrong, it must be said that a lot of his own personal officials are not in his corner in this one, but I suspect that this may be the beginning of a trade war – and a trade war is one that the US probably will lose.
Important Economic Data Due Today
11:30 GBP Construction PMI
Consensus: 50.5
Effect: Higher than expected is good for the GBP
12:00 GBP BOE Governor Carney Speaks
Consensus: None
Effect: More hawkish than expected is good for the GBP
15:30 CAD GDP
Consensus: 0.1%
Effect: Higher than expected is good for the CAD
Tentative GBP PM May Speaks
Consensus: None
Effect: More hawkish than expected is good for the GBP
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