Welcome to the weekly market update from IFX payments.
The global economy was allowed a brief sigh of relief this morning as big movements were made in the US and China trade talks. Read on to find out more.
Current rates
| Currency pair | Rate |
|---|---|
| eur usd |
1.1099 |
| gbp eur |
1.1864 |
| gbp usd |
1.3170 |
Rates correct as of 09:30am in Monday 12th May but may now have changed.
The Big 3
Three stories covering the latest developments in economies, currencies and borders.
US to cut China tariffs by 115pc
The world's two largest economies have agreed to cut tariffs on each other by 115% after two days of trade talks, with the US lowering tariffs on China to 30%. In turn, China will lower their retaliatory 125% tariff on imports to 10pc.
The dollar jumped and markets surged with big gains from the Hang Seng Index, and FTSE 100. It's expected the same will happen when US markets open later. Premarket trading figures show bumps of 2.2% from the Dow Jones, while the S&P 500 surged by 2.8% and the Nasdaq 100 surged 3.6%.
With this morning's news and fresh optimism around the dollar, government bonds were sold off and the price of gold took a tumble.
UK interest rate cuts: what happens next?
Following interest rate cuts last week, we'll be watching to see if Bank of England governor Andrew Bailey gives any guidance on what the future holds when he speaks on Tuesday. Further rate cuts and a wild-card 50 basis point cut are the variables to watch. A follow up cut in June suggests the bank is considering speeding up the delivery of cuts to support a stalling economy.
Peace on the horizon?
We could yet see geo-political tensions ease if Volodymyr Zelenskiy meets with Vladimir Putin in Istanbul on May 15 for direct negotiations over the Ukraine/Russia conflict. The meeting going ahead rests on Russia beginning a 30 day ceasefire this week. The US president has encouraged it to happen. UK Foreign Secretary David Lammy is set to announce further sanctions on Russia regardless. The question is how Putin will respond.
Elsewhere, India-Pakistan appeared to be holding to a truce following clashes over the border and stocks in both countries jumped.
[Reuters]
Recap
What happened recently?
There was much needed positivity around global trade talks last week with the US/UK agreement generating optimism that other countries could find common ground with the US. USD finally stabilised after recent depreciation and the news today indicates this may have been the first in a sequence of more established deals with trading partners in the weeks to come.
Looking forward
The big moments to track this week.
Tuesday - US CPI (Inflation linked data)
UK Unemployment rate data
Thursday - UK GDP (Growth data)
US PPI (inflation linked data)
UK growth data is particularly important as any sign of contraction could force the BOE to be more proactive in their rate cutting cycle.
Here's what we're talking to our clients about
We’re always here to support. Here’s a sneak peek at some of the conversations we’re having with clients and how we’re helping them.
- Continued awareness and sensitivity of global trade talks, particularly US/China outcomes.
- How the current environment is affecting their order books.
The contents of this article do not constitute financial advice and are provided for general information purposes only.
