Global trade concerns remained high on Thursday and intensified after the New York close as President Trump expanded the trade war with tariffs on Mexico.

Global trade and growth concerns remained high on Thursday and intensified after the New York close as President Trump expanded the trade war with tariffs on Mexico. Weaker than expected Chinese PMI manufacturing data also undermined market confidence.

There was further downward pressure on global bond yields with US benchmarks at 20-month lows and German yields close to record lows.

Equity markets retreated and there was fresh demand for defensive assets as the Japanese yen and Swiss franc strengthened.

The Euro and Sterling remained vulnerable, although the dollar failed to hold its best levels as US yields declined and US reservations increased.

The Canadian dollar lost ground as trade fears increased again after the US move on Mexico.

Bank of England Deputy Governor Ramsden stated that he was a little more pessimistic that the central bank consensus over the growth outlook, although further gradual monetary tightening would be appropriate if there was a smooth Brexit process.

Sterling continued to drift lower as political tensions also remained in focus with no evidence that key political figures were moving any closer to securing a Brexit resolution. There were, however, reports that Germany would back a further extension if there was a second referendum vote. GBP/EUR settled with marginal gains after finding support above 1.1300 while GBP/USD dipped to fresh 4-month lows below 1.2600.

There was further wariness of potential month-end selling with choppy ranges likely to be seen in New York trading on Friday. The Lloyds business survey weakened to 10 for May from 14 as political uncertainty sapped confidence, although there was a recovery in consumer confidence. Sterling was also hampered on Friday by underlying global trade fears and GBP/USD traded only just above 1.2600.

Economic Calendar

07:00EUR German Retail Sales (Y/Y)(APR)1.10%-2.00%
07:00EUR German Retail Sales (M/M)(APR)0.40%-0.20%
07:00GBP Nationwide House Prices (Y/Y)(MAY)1.20%0.90%
07:30CHF Retail Sales (Y/Y)(APR)-0.80%-0.70%
09:00GDP Prelim YY-0.10%
09:00GDP Prelim QQ-0.20%
09:30GBP Mortgage Approvals(APR)-62.34K
10:00CPI (EU Norm) Prelim MM(MAY)0.80%2.30%
10:00CPI (EU Norm) Prelim YY(MAY)1.20%1.10%
10:00Consumer Price Prelim YY(MAY)1.30%1.10%
10:00Consumer Price Prelim MM(MAY)0.20%0.20%
13:00Germany CPI (Y/Y)(MAY)1.60%2.00%
13:00Germany CPI (M/M)(MAY)0.50%1.00%
13:00Germany Harmonised CPI (M/M)(MAY)0.60%1.00%
13:00Germany Harmonised CPI (Y/Y)(MAY)1.70%2.10%
13:30USD PCE Core Price Index(M/M)(APR)0.10%0.10%
13:30USD PCE Core Price Index (Y/Y)(APR)1.70%1.60%
13:30USD Personal Income (M/M)(APR)0.40%0.10%
13:30USD Personal Spending (M/M)(APR)0.70%0.90%
13:30USD Personal Consumption (Q/Q)(APR)-0.70%
13:30CAD GDP (M/M)(MAR)--0.10%
13:30CAD GDP Annualized (Q/Q)0.70%0.40%
13:30CAD RMPI (M/M)(APR)3.90%2.80%
13:30CAD GDP (Y/Y)-1.10%
14:45USD Chicago PMI(MAY)-52.6
15:00USD Michigan Consumer Sentiment(MAY 01)9796.9
17:00FOMC member John C. Williams speech--
18:00USD Baker Hughes US Oil Count-797

*All rates shown are indicative of interbank rates and should only be used for indication purposes only. It is important to note that foreign exchange rates fluctuate and that rates may vary depending on the amount and the base currency that is purchased or sold. Rates are correct as of 8:00am UK time. CentralFX are not responsible for the rates shown.