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Trump targets ‘’the largest deal ever made’’ with China

US DOLLAR

The Dollar has kicked off the week strong following news over the weekend that the US has agreed to suspend the imposition of new tariffs on China. The Dollar Index rose as high as 96.61, its best level since June 21st, as US yields and equity futures also rallied. Over the weekend President Trump stated China “wants to make a deal. I want to make a deal. Very big deal, probably, I guess you’d say the largest deal ever made of any kind, not only trade.”

Looking ahead, Friday’s jobs report will be the key data focus this week.

EURO

The Euro is lower against the Dollar this morning, weighed by the broad rally in risk sentiment on positive trade headlines. The single currency showed minimal reaction meanwhile to a slightly softer Euro Zone manufacturing PMI print in recent trade having touched a daily low of 1.1318 earlier in the session, its lowest level since June 21st.

Euro Zone PPI figures are due tomorrow while service PMI follows on Wednesday and retail sales on Thursday.

STERLING

The pound has weakened versus the US Dollar this morning as the Dollar rallied alongside US yields and equity futures on news the US had suspended fresh tariffs on China. Domestic factors have been limited meanwhile including on the Brexit front while reaction to last week’s inflation report hearings was also limited.

Bank of England Governor Mark Carney speaks tomorrow while service PMI plus Cunliffe and Broadbent are scheduled for Wednesday.

JAPANESE YEN

The Japanese Yen is one of the weakest G10 currencies to begin the week as safe-haven assets struggle in a risk on market. Domestic impulses may also be providing a weight after manufacturing PMI and consumer confidence missed expectations overnight. USD/JPY has topped out at a daily high of 108.53 this morning, its best level since June 19th.

Bank of Japan board member Funo speaks on Wednesday followed by household spending and the leading economic index for May on Friday.

AUSTRALIAN DOLLAR

Despite the positive trade news over the weekend, the Australian Dollar has softened versus a rampant US Dollar with AUD/USD falling back below 0.70 this morning after gapping higher overnight to 0.7035.

The RBA meet tomorrow and are widely expected to lower the Cash Rate to 1.00% from 1.25% and join other major central banks in shifting to an easing bias.

CANADIAN DOLLAR

The Canadian Dollar is one of the strongest G10 currencies to start the week and is currently flat versus its US counterpart, at just below 1.31. It has benefited from a near three-percent rally in crude prices on news that Saudi Arabia and Russia have agreed to extend the OPEC+ deal by six months.

From a domestic standpoint, manufacturing PMI is out tomorrow, trade data on Wednesday and the jobs report on Friday.

SWEDISH KRONA

EUR/SEK remains contained in the 10.50-1060 range as it was for most of last week with few fresh impulses to note. Manufacturing PMI missed expectations this morning although was largely ignored with investors likely looking ahead to the Riksbank policy meeting tomorrow who are expected to resist joining other central banks in shifting to an easing bias.

NORWEGIAN KRONE

EUR/NOK fell to a daily low of 9.6631 where a weaker manufacturing PMI print may have provided some support.

House prices figures are due Wednesday followed by manufacturing production on Friday.

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