The crisis in trade talks weighed heavily on markets, helping the USD and the JPY, but the moves were not even. US-China trade war was the center of global focus last week. Situation became worse as Liu’s visit ended with nothing but declaration that there were still substantial differences between the two sides. Trade war will likely drag on which should weigh on global market sentiments. Across the US Arena, inflation expectations increased, the FED had projected two rate hikes until the end of 2019. But as the economy weakened it retraced the move. Hence, the actual inflation would decide the next move. President Donald Trump on Saturday called for China to act now on trade or risk facing a worse deal if negotiations continue into a possible second term after the 2020 presidential election. Over the week, Yen ended as the strongest one.
The British pound was little changed on Friday after data showed the UK economy got a boost ahead of a Brexit that never came, with traders doubtful Prime Minister Theresa May can reach a deal with the opposition on how to leave the European Union. Economic data has taken a backseat in determining the direction of the pound as prolonged Brexit negotiations dominate trading. The Euro has moved to a new session high after the softer CPI data was released last week.
It’s going to be another choppy week ahead. Chatter on trade, Brexit and the stats will influence risk appetite.