As geopolitical tensions between the East and West rise, sanctions and souring relations could have lasting impacts on business globally.
- News on the signing of the ‘phase one’ US-China trade deal to support the US dollar.
- No-deal Brexit fears drag the Pound lower.
- Will a rebound in German retail sales buoy the single currency?
US-China optimism supports USD
At the start of the week, the US dollar was able to rise to a three-week high against a Brexit-battered Pound as trade optimism increased. Beijing announced it would lower tariffs on a range of goods as it attempts to boost imports, which increased trade optimism.
Added to this, President Donald Trump announced the negotiating teams had ‘just achieved a breakthrough on the trade deal and we will be signing it very shortly’.
Looking ahead, the US dollar could benefit from a further increase in US-China trade optimism. Markets will remain focused on trade developments as the New Year approaches. USD could benefit if officials from Washington and Beijing announce the date they are due to meet and sign the ‘phase one’ deal.
No-Deal Brexit fears continue to drag on Sterling
The Pound suffered losses at the start of the week as traders worried the UK could face crashing out of the European Union without a trade deal in place by December 2020.
Boris Johnson’s Brexit deal ruled any extension of post-Brexit negotiations illegal, which dampened Sterling sentiment as it increased the risk of a no-deal exit.
A lack of UK data is likely to limit Sterling movement heading into the New Year.
Euro to rise as German retail sales rebound in November
The single currency remained flat ahead of the Christmas holiday period, with data showing a decline in German import prices having little impact.
There’s no notable Eurozone data to look out for until next week’s German retail sales.
The euro could climb if German consumer spending improved in November.
07:00EUR German Retail Sales (Nov)
Joining the corporate trading desk in 2007, Phil now over sees all of Currencies Direct’s corporate dealing activity. Having gained experience working with hundreds of businesses to optimise international payments processes and execute comprehensive risk management strategies, Phil currently works with a portfolio of corporate clients whilst managing Currencies Direct’s overall market exposure
Phil has FCA approval and has completed the Certificate in International Treasury Management (CertiTM)