President Trump and Chinese President Xi called a truce and agreed to restart trade talks.
At the G20 Summit, President Trump and Chinese President Xi called a truce and agreed to restart trade talks. The US will not impose additional tariffs on China at this stage.
Risk appetite improved sharply in Asia on Monday with equities making significant headway and bond yields edged higher amid reduced speculation over aggressive Fed easing.
Oil prices moved sharply higher with relief over potential demand conditions amplified by Russian and Saudi Arabian backing for production cuts to be extended.
The yen, Swiss franc and Euro declined as defensive demand faded with a further delay on deciding EU jobs also hampering the Euro.
Commodity currencies failed to benefit from stronger global equities as the US currency regained ground
Gold also declined sharply amid stronger risk conditions and dollar gains with a move back below $1,400 per ounce. Bitcoin also lost ground as defensive support declined.
The final first-quarter UK GDP reading was unrevised at 0.5% with annual growth at 1.8%. The current account deficit widened sharply to £30.0bn from £23.7bn previously and the trade deficit widened to a record high. There was an element of relief that the data was not worse than expected.
The UK currency also gained some ground on valuation grounds, especially as it has under-performed against commodity currencies. There were still important concerns over political developments as the Conservative Party leadership campaign continued amid fears over momentum towards a ‘no-deal’ Brexit outcome.
After approaching fresh 5-month lows close to 1.1122, GBP/EUR retreated while GBP/USD settled near 1.2700. CFTC data recorded a further increase in short, non-commercial Sterling positions to 4-month highs, maintaining the risk of short covering if sentiment shifts. GBP/EUR bounced towards 1.1200 on Monday with GBP/USD capped below 1.2700 amid US strength.
Economic Calendar
| Expected | Previous | ||
|---|---|---|---|
| 07:15 | FOMC Member Richard Harris Clarida Speech | - | - |
| 07:30 | CHF Retail Sales (Y/Y)(MAY) | 0.60% | -0.80% |
| 08:30 | CHF SVME PMI(JUN) | 48.9 | 48.6 |
| 08:45 | Markit/ADACI Mfg PMI(JUN) | - | 49.7 |
| 08:50 | Markit Mfg PMI(JUN) | 50.6 | 50.6 |
| 08:55 | EUR German Manufacturing PMI (M/M)(JUN) | - | - |
| 08:55 | German Unemployment Change(M/M)(JUN) | -8K | 60K |
| 08:55 | German Unemployment Rate(M/M)(JUN) | 4.90% | 5.00% |
| 09:00 | Unemployment Rate(MAY) | 10.30% | 10.20% |
| 09:00 | Euro-Zone PMI Manufacturing(JUN) | 47.7 | 47.7 |
| 09:30 | GBP Consumer Credit(MAY) | 0.978B | 0.942B |
| 09:30 | GBP PMI Manufacturing(JUN) | 52 | 49.4 |
| 09:30 | GBP Mortgage Approvals(MAY) | - | 66.26K |
| 10:00 | Euro-Zone Unemployment Rate(MAY) | 7.70% | 7.60% |
| 14:45 | USD Manufacturing PMI(JUN) | - | 50.6 |
| 15:00 | USD Construction Spending (M/M)(MAY) | 0.40% | 0.10% |
| 15:00 | US Manufacturing ISM(M/M)(JUN) | 53 | 52.1 |
| 23:45 | NZD Building Permits (M/M)(MAY) | - | -7.90% |