Markets have spent the week concerned with an escalation in the trade wars between USA and China and Europe. Some analysts are saying it is just a negotiating tactic on the part of Trump , but others are concerned that it may get more serious and could crimp economic growth. We have also seen a deal done to secure funding for Greece from the Eurogroup after a decade of austerity.
We have seen some European data out with PMI for Jun being better than expected in France , Germany and the Euro area. This has helped the EUR to bounce from lows of 1.1510 at 8.00pm last night to highs of 1.1674 24 hours later. The GBP has also been strong since the BOE economist suggested that rates should rise soon with last at 1.3278 and a high of 1.3314. The US Dollar has weakened against most currencies but it still hold on to an uptrend and we would need to see a few more days of weakness for the trend to change.
The ECB has made it clear that interest rates will stay low for a long time so I expect the EUR/USD to continue lower and I also expect that EUR/GBP should also move lower.
Stock indices have bounced after a poor week so far with DAXat 12550 up 68 , the CAC at 5365 up 48 , the FTSE MIB at 21898 up 204 , and the FTSE at 7654 up 91. Trends are still down but we may have seen short term lows.
Bond yields remain well bid overall but a few points higher today with UK10 at 1.31% , GE10 at 0.35% and US10 at 2.90%.
Markets are waiting for any deal to be done within OPEC on a production increase to ease prices.