Demand for safe haven assets looks likely to be underpinned early this week amid heightened trade tensions after U.S. President Donald Trump raised the stakes in the Sino- U.S. trade war and Beijing pledged to retaliate.
Currency traders will also be looking ahead to a fresh round of central bank decisions, following last week’s Federal Reserve rate cut. Fed speakers will be in focus, as investors try to gauge the future path of monetary policy.
The U.S. dollar plumbed seven-month lows against the safe haven yen on Friday after data showing that U.S. jobs growth slowed in July, underlining the case for the Fed to cut rates again in September.
Nonfarm payrolls increased by 164,000 jobs in July, less than the month prior, and wages increased modestly, the Labor Department said.
The report came a day after Trump announced an additional 10% tariff on $300 billion worth of Chinese imports starting Sept. 1, a move that led financial markets to almost fully price in a September rate cut.
The dollar fell 0.68% against the Japanese yen last at 106.59. The euro rose 0.23% against the greenback to 1.1106. The Swiss franc, which like the yen serves as a safe-haven investment in volatile markets, gained 0.8% against the dollar to 0.9820.
Trump on Thursday tweeted that a 10% tariff would be imposed on $300 billion worth of Chinese goods on Sept. 1 after U.S. negotiators returned from the latest round of trade talks without having made significant progress.
Meanwhile, the British pound held close to 30-month lows against the dollar on Friday as a shrinking of Britain’s ruling Conservative Party’s majority in parliament added to worries over domestic politics three months before the deadline for Brexit.
Sterling shed more than 4% of its value in July, its worst month since October 2016, following Johnson’s vow to leave the European Union on Oct. 31 whether or not a transition deal can be agreed with Brussels.
Ahead of the coming week, has compiled a list of significant events likely to affect the markets.
Monday, Aug 5
U.K. services PMI
ISM Non-Manufacturing PMI
Tuesday, Aug 6
New Zealand employment report
Reserve Bank of Australia interest rate decision
FOMC Member James Bullard speaks
Wednesday, Aug 7
Reserve Bank of New Zealand interest rate decision
German industrial production
Thursday, Aug 8
China trade balance
U.S. initial jobless claims
Friday, Aug 9
Japan Prelim GDP data
RBA monetary policy statement
China Consumer price inflation
U.K. Prelim GDP
Canada employment report
U.S. PPI
