This had been via Tuesday’s directive to look into an additional 10% tariffs on $200 billion of Chinese imports, earning the pledge to retaliate from China.
Amid the lack of fresh leads, equity markets can be seen trading broadly to the tune of the jitters with the Dow concluding Thursday with the 8th consecutive session of declines and the likes of the HSI tumbling below its 200-day moving average. Moving into the new week, we are seeing an abundance in economic data to provide us with a view of the economic momentum, though one should not be surprised to find the abovementioned trade issue having its impact lingering. China’s latest response promised “corresponding number and quantity” should US release the list of the $200 billion imports had been the last move in this game of trade chess.
US-China trade tensions aside, there would be a whole series of data to watch, particularly from the US next week. Having seen the US dollar index, measured against six major currencies, touched the highest level in eleven months in the week at 95.52, US growth momentum will be worth scrutinising in the coming week.
The likes of June’s conference board consumer confidence index, US Q1 GDP (third estimate), May personal income and spending, and also the core PCE updates would be assessed against Fed chair Jerome Powell’s view that the case is “strong” for the further rate hikes from this week’s ECB forum. The current consensus is for Q1 GDP to stay at 2.2% quarter-on-quarter (QoQ) in this second revision, one to watch. Likewise for the core PCE, a number closely look at by the Federal Reserve, is expected to be unchanged at 0.2% month-on-month (MoM). Personal income and spending meanwhile are expected mixed with consumption likely to slow down on a month-on-month (MoM) basis and income to accelerate slightly in Friday’s release.
IG’s US dollar basket chart finds prices trapped in a narrow range of between 93.90 and 94.92, though uptrend looks intact at the moment. Watch breaks on the upside with any surprises in the releases.