It’s been a very quiet session for currency markets, despite US President Trump’s new threat to impose further tariffs on $200bn of import from China. The Dollar is marginally weaker for the second consecutive session despite the rise in US PPI-inflation to 3.4% yoy in June but only the Canadian Dollar has appreciated markedly versus the Dollar after the Bank of Canada hiked rates 25bp (the fourth hike in its cycle).
Sterling’s stability is particularly remarkable, with the GBP/USD virtually unchanged around 1.327 for the third consecutive session. Markets seemingly have no appetite to push Sterling in either direction but may look to Bank of England Governor Carney’s speech later today for signs that a rate hike will be forthcoming this August despite the ongoing turmoil in British politics. The Euro continues to slowly grind stronger and the trade-weighted-index is now at a multi-year high as expectations mount that the European Central Bank will start reducing its bond purchases as of October.
