TALKING POINTS – TRADE WAR, CHINA, YEN, US DOLLAR, ECB FORUM
- Yen, Swiss Franc[1] rise as US, China trade war sours risk appetite
- FTSE 100[2], S&P 500[3] index futures hint more of the same is ahead
- ECB Forum is getting started but may be overshadowed for now
The anti-risk Japanese Yen[4] and Swiss Franc pushed higher for a second day in Asia Pacific trade as an escalating trade war between the US and China[5] sent markets scrambling. Regional bourses bled, with the regional MSCI equities benchmark on pace to suffer its largest loss in seven days at 1.3 percent. The sentiment-linked Australian Dollar[6] bore the brunt of selling pressure in the G10 FX space.
BACKGROUND: A Brief History of Trade Wars, 1900-Present[7]
Looking ahead, a quiet offering on the economic data front is likely to keep trade tensions in the spotlight. Futures tracking the FTSE 100 and S&P 500 equity benchmarks are pointing sharply lower, hinting the risk-off mood is set to persist when London and New York come online. That means overnight price dynamics are likely to find follow-through.
The ECB Forum in Sintra, Portugal is also of note. Top central banks’leaders will join eminent economists to discuss price- and wage-setting in advanced countries. That gets at the heart of the post-crisis challenge facing policymakers: growth and labor markets have recovered but inflation remains stubbornly low across much of the developed world. This has prolonged ultra-loose monetary policy settings.
