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Frantic negotiations continued ahead of Wednesday's deadline, but even the USA seemed unsure of its tariff policy.
Currency markets made a sluggish, risk-off start to the new week as questions swirled around the US tariff negotiating deadline. After previously suggesting Wednesday (9 July) was a firm deadline, treasury secretary Scott Bessant gave the strongest indication yet that things were a little more fluid, and that some economies might be given more time (perhaps even beyond 1 August) to negotiate a deal.
The US dollar benefitted from this uneasy start, strengthening somewhat against the euro and trading sideways against the pound. For its part, sterling was able to claw back some of the ground it lost to the euro in last week’s wobbly conditions.
All eyes remain on Washington, D.C., where the self-imposed deadline for getting dozens of trade deals done is beginning to look somewhat optimistic. In what many took to be a negotiating tactic, President Trump yesterday threatened BRICS-aligned nations (that’s Brazil, Russia, India, China, South Africa, and a handful of others) with an additional 10% tariff for promoting “anti-American” policies.
The German trade surplus widened to €18.4 billion in May, beating expectations by several billion euros. Exports fell to a four-month low, with a notable slowdown in exports to the United States and China.
Australia’s central bank, the Reserve Bank of Australia (RBA), this morning voted to keep interest rates unchanged at 3.85%. The Australian dollar is up by around 0.4% against the pound since that decision, as markets had been expecting a quarter-point cut.
Tech giant Apple has appealed a whopping €500 million fine dished out by the European Union for issues around its app store. In reply, Apple’s lawyers decried the “unprecedented” scale of the fine and the “unlawful” changes it demanded of the app store.
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GBP: A positive platform
Sterling made a solid start to the week after several days of unease last time out. Even so, the pound dipped substantially against its rivals last week, and the prospect of a key GDP release to round out the week means few are expecting a quiet week.
GBP/USD: the past year
EUR: The race is on
Like an ill-prepared university student, the eurozone finds itself scrambling to get a major piece of work over the line before a looming deadline. But is the deadline tomorrow or in fact several weeks from now? The fact it is genuinely unclear meant the euro weakened by around half a cent against the pound and the US dollar yesterday.
GBP/EUR: the past year
USD: Several announcements
Scott Bessant said on Monday he would make “several announcements” over the next 48 hours. The US dollar will be materially affected by the contents of those announcements, as well as just how significant they prove to be for the economy.
EUR/USD: the past year
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