The common currency jumped before the opening bell of the London trading, pushing the EUR/USD above 1.17, the highest level in over a week. The Euro was supported by the strong industrial production data from the Eurozone’s biggest economy and a Bloomberg report mentioning that some ECB members believe that postponing the first hike in the Euro Area until late-2019 could prove to be too late.
A confirmation to the European carmakers from US ambassador in Germany that Trump would stop threats of imposing a 20-percent tariff on cars imported from the EU as long as the European Union lifts its tariffs on imports of US vehicles depicts a change in tone from Washington and is also likely to have supported the common currency yesterday.
Thursday’s releases from the United States were overall rather positive. Job market data was quite in line with expectations and business activity in the services sector increased. ISM Services Index rose to an impressive 59.1, its highest level in four months.
Aside from the economic data and information related to an ongoing trade disputes, ‘minutes’ from last Federal Reserve meeting showed that the Fed is observing an increase in fears over the impact of tariffs that lead to scaling back or postponing investment plans of some US firms. Although a worsening sentiment could threaten the future economic growth in the country, it seems not to be serious enough to yet be reflected in the economic data.
Sterling’s rise halts, despite Carney’s optimism
Sterling did not manage to keep onto its gains on Thursday. The currency slipped against both the Dollar and a significantly stronger Euro. The lack of fuel to support further gains could be attributed to worries that the UK might not be able to secure the trade agreement before it leaves the bloc in 9 months. The currency didn’t receive much support from an upbeat assessment of the economy made by the governor of the Bank of England who confirmed that he is more confident that the soft economic data in the first quarter was a reflection of bad weather and not the worsening economic climate.
The most important release today will be a June US job market report. Consensus believes that 195 thousand jobs were created and wage growth accelerated to 2.8% from the same period in a previous year. Apart from the readings, investors will focus on the developments in US-China trade relations. Trump’s administration officially imposed new tariffs on $34 bn of Chinese imports, practically guaranteeing a retaliation measures of the same size from China. The US president also threatened to impose tariffs on all Chinese goods, worth $500 bn, making it his biggest shot in a recent trade dispute so far.