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US Open Preview – Trade tensions in focus as Juncker meets Trump
July 25, 2018 11:26 amVideo
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Here are the latest developments in global markets:
Day ahead: Juncker meets Trump, all eyes on trade; corporate earnings also in focus
In a relatively light day in terms of data releases, the main event will likely be a meeting between US President Donald Trump and European Commission President, Jean-Claude Juncker in Washington. The two are expected to discuss trade, with any material comments having the capacity to affect broader market sentiment.
Juncker will likely seek a waiver of the US tariffs on EU steel imports, and Trump will look for the EU to lower its levies on US imports in general. Crucially, a failure to reach an agreement could even provoke fresh tariffs on European cars imported into America – as Trump threatened a month ago. In light of this, the stocks of popular European carmakers like Daimler and BMW will probably be extremely sensitive to any developments. Besides equities, safe-haven currencies like the Japanese yen could also be impacted, attracting inflows in case of an escalation in tensions, or coming under selling pressure on signs of a potential deal. The opposite holds true for risk-sensitive currencies like the Australian dollar. In this sense, aussie/yen looks like a good proxy for how trade tensions may play out.
In terms of economic data, the only notable release will be US new home sales for June, due out at 1230 GMT. They are expected to have declined by 2.8%, a turnaround following a 6.7% gain in May.
Turning to equities, the earnings season continues with Boeing, Facebook, Paypal, and Qualcomm being some of the companies reporting their quarterly results today. Boeing’s earnings will go public before Wall Street’s opening bell, while the other three will report their own after the market close.
In energy markets, the weekly EIA inventory data are slated for release at 1430 GMT. The forecast is for a 2.3mn drawdown in crude stockpiles, after a 5.8mn rise in the previously tracked week.
As for other public appearances, a meeting between Canadian Foreign Minister Freeland and Mexican President-elect Obrador could attract the interest of loonie and peso-traders.
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