The market’s reaction to news China’s Jinping Xi will meet Trump on the side-line at the G20, has been tame. A meeting between the two is clearly a step in the right direction, but no one is being fooled into thinking that China will suddenly back down from their position. Investors are looking ahead cautiously to the G20 with a quiet optimism that some progress could be made. US equities are edging higher.
2. Commodities in focus as US threatens more sanctions on Iran
Escalating tensions between the US and Iran is keeping a lid on broader market sentiment. Gold rallied to a fresh 6 year high, whilst oil also extended last week’s gains in early trade, as the US looked to implement further sanctions on the already choking Iran.
3. Fed battered dollar extends losses
The dollar slipped again on Monday, extending losses from its largest weekly decline in 4 months last week. The dollar dropped as the Fed opened the door to a rate cut, possibly as soon as next month. A dovish outlook on the economy by the Fed, amid concerns of a slowing global economy saw the dollar decline 1.4% versus a basket of currencies last week. The dollar is down a further 0.1% towards the end of the European session on Monday.
4. Euro – the best of a bad bunch?
The weaker dollar injected life into the euro which is looking like the best of a bad bunch right now. With the Fed ready to cut rates and the UK set to experience 0% growth in Q2 amid lingering Brexit uncertainty, any signs of a positive in the eurozone will be well received. The IFO business climate index recorded a decline, however it was less of a decline than forecast allowing euro traders a small sense of relief.
5. Pound pares earlier gains, has Boris dented his chances of winning?
The pound failed to capitalise on the weaker dollar. All eyes are on Westminster as Boris Johnson and Jeremy Hunt go head to head in the final leg of the Toy leadership race. Postal votes will be cast by 160,000 conservatives with the results to be revealed late July. Boris was once again driving his Brexit, come rain or shine message, as he attempted to move past the weekend’s shenanigans.