- No consensus at the G7 summit, Trump insults the Canadian host
- A series of Trump’s tweets weaken the CAD, JPY lower ahead of ECB, Fed meetings
- Chinese inflation came out during the weekend
The G7 summit taking place in Canada was on top of a list of events last week, and as expected there was no consensus hammered out. Admittedly, the group of seven countries approved a joint communique, but it was quickly rejected by US President Donald Trump via... Twitter. He wrote "Based on Justin’s false statements at his news conference, and the fact that Canada is charging massive Tariffs to our U.S. farmers, workers and companies, I have instructed our U.S. Reps not to endorse the Communique as we look at Tariffs on automobiles flooding the U.S. Market!". He added that "fair trade is now to be called fool trade if it is not reciprocal".
After expressing some insults aimed at Canadian PM Justin Trudeau, he also referred to NATO payments singling out Germany paying as low as 1% of its GDP to NATO while the US pays 4% of a much larger GDP. After such a series of harsh tweets which led to no consensus with regard to trade (undoubtedly the hottest topic from markets’ standpoint) he moved to Singapore where a meeting with North Korean leader Kim Jong Un will take place on Tuesday. Was the US stance on trade surprising? Well, expectations to reach a deal in Quebec were really low, hence disappointments should be quite contained as well. Anyway, it underlines that there is still a lot to do in order to "satisfy" Donald Trump. Notice that German Chancellor Angela Merkel called a way Trump used to withdraw support for the G7 communique as "sobering and a bit depressing". In turn, Emmanuel Macron had no comments at all, but he had already provided even earlier that "work will continue to find a consensus on trade". France will host next G7 summit.
The USDCAD jumped immediately when the market opened on late Sunday, but those gains have been erased since then. As a result, the pair stayed below its key trend line giving hope for sellers that a turning point could be close. Notice that the US dollar might be under pressure due to the Fed meeting on Wednesday. Source: xStation5
Apart from the G7 summit and related tweets of Trump it’s worth mentioning the Japanese currency which is lagging behind in the morning being over 0.4% lower against the US dollar. There were no specific revelations, but some said the JPY could suffer on the upcoming meeting of Fed and ECB as policy divergence between the big three central banks is expected to widen. The Federal Reserve is broadly anticipated to hike rates, whereas the European Central Bank could sketch out a plan on exiting its asset purchase programme. We will provide more on these events later today. Looking back to the past weekend we had the inflation data from China producing 1.8% CPI and 4.1% PPI for May. The former turned out to be in line with the median estimate, while the latter beat it on higher crude and metal prices.
The Japanese currency is taking a hit in early trading on Monday as Fed and ECB meetings loom. The pair bounced back from a lower bound of a channel, and therefore one may expect it to continue moving higher over the next days. Source: xStation5
This article is provided for general information purposes only. Any opinions, analyses, prices or other content is provided for educational purposes and does not constitute investment advice or a recommendation. Any research has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Any information provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it.
Past performance is not necessarily indicative of future results, and any person acting on this information does so entirely at their own risk, we do not accept liability for any loss or damage, including without limitation, any loss of profit, which may arise directly or indirectly from the use of or reliance on such information.