A -2.6% monthly GDP contraction weighed heavily on the pound as worries over the UK’s economic outlook picked up again.
This was mostly attributed to relief that the US-China trade deal signed back in January remains intact, after White House trade adviser Peter Navarro sowed confusion by announcing the deal was ‘over’ before hastily rescinding his remarks.
However, market sentiment began to sour again in the middle of the week following reports the US is preparing to impose tariffs worth $3.1bn on imports from the UK and EU.
The threat of a transatlantic trade war over the summer saw investors quickly flock back to the safe-haven US dollar.
Adding to market jitters was a worrying rise in US coronavirus cases last week, which stoked second wave fears and kept the ‘Greenback’ in demand.
The sharper-than-expected jump in US durable goods orders in May further supported USD exchange rates, as did a rebound in personal spending over the same period.
Turning to this week’s session, with second wave fears growing as coronavirus cases in parts of the US continue to spike, ongoing demand for safe-haven assets are likely to see the US dollar extend its recent gains.
On the data front, the latest ISM manufacturing PMI could give the US dollar a boost on Wednesday if US factory activity is shown to have returned to growth this month.
Closing out the shortened US trading session on Thursday will be the release of the highly influential non-farm payroll report. Will another massive jump in job growth help to strengthen the US dollar ahead of the July 4th Weekend?
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)