News on the US Trade War with China Prevail on the Market (Weekly Review)

Among important events of the past week we should mention the release of consumer inflation data in Canada and the US Federal Open Market Committee Meeting Minutes, but investors were more focused on news related to the US-Chinese trade conflict and scheduled for Friday Speech by Fed Chairman Jerome Powell at the Jackson Hole Annual Symposium.

Thus, released macroeconomic statistics did not significantly affect the foreign exchange market. The euro and the British pound were still subject to pressure due to the political situation in Italy and the high probability of Britain leaving the EU without a deal. Nevertheless, their decline against the USD was limited, and on Friday both currencies were able to win back some of the positions lost as a result of the fall against the USD.

The reason for its sales was the news about China imposing duties on goods from the United States and rather soft comments from Jerome Powell. Escalation of the trade war between the United States and China increases the likelihood of developing currency wars, where the Fed may resort to another lower interest rate. The Fed Governor states such a probability, but he did not specify when and how much. Due to the absence of progress in the US-China negotiations, the USD may continue to be sold for the JPY and the CHF, but this is unlikely to help the EUR and the GBP develop a large-scale correction.

Schedule for this week:

Monday, August 26
08:00 GMT - Germany. IFO Business Expectations;
12:30 GMT - USA. Durable Goods Orders.

Tuesday, August 27
12:55 GMT - USA. Redbook Index;
13:00 GMT - USA. House Price Index;
14:00 GMT - USA. Consumer Confidence.

Wednesday, August 28
06:00 GMT - Germany. Gfk Consumer Confidence (Sep);
16:20 GMT - USA. FOMC Member T. Barkin Speaks.

Thursday, August 29
01:30 GMT - Japan. BoJ Board Member Suzuki Speaks;
07:55 GMT - Germany. Unemployment Rate;
07:55 GMT - Germany. Unemployment Change;
12:00 GMT - Germany. Harmonised Index of Consumer Prices (HICP);
12:30 GMT - USA. Core Personal Consumption Expenditure (PCE) Prices;
12:30 GMT - USA. Personal Consumption Expenditure (PCE) Prices;
12:30 GMT - USA. GDP;
12:30 GMT - USA. GDP Price Index;
12:30 GMT – USA. Initial Jobless Claims;
12:30 GMT - Canada. Current Account (Q2);
14:00 GMT - USA. Pending Home Sales.

Friday, August 30
23:30 GMT - Japan. Unemployment Rate;
23:30 GMT - Japan. Tokyo Consumer Price Index (CPI);
23:50 GMT - Japan. Retail Sales;
23:50 GMT - Japan. Industrial Production;
01:30 GMT - Australia. Building Permits;
09:00 GMT - Eurozone. Core Consumer Price Index (CPI);
09:00 GMT - Eurozone. Consumer Price Index (CPI);
09:00 GMT – Eurozone. Unemployment Rate;
12:30 GMT – Canada. GDP;
12:30 GMT - Canada. GDP Annual;
12:30 GMT - USA. Personal Income/Spending;
12:30 GMT - USA. Core PCE Price Index;
13:45 GMT - USA. Chicago PMI;
14:00 GMT - USA. Michigan Consumer Sentiment.

Author: Anthony Porter, IAFT Analyst