This information has been prepared by IG, a trading name of IG Markets Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients. See full non-independent research disclaimer and quarterly summary.
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.