By Matthew Ryan, Head of Market Strategy Ebury International Payments Company

The dollar fell against most of the coins last week, as market participants became increasingly nervous in view of the US duties deadline on Friday.

OR progress toward Achieving Commercial Agreements was excruciatingly slow from the day of liberation onwards. However, there is finally some tangible progress, especially after last week’s headlines reporting the signing of a long -awaited trade agreement between the US and Japan. Even more important was the news of the weekend that the European Union ended up in a framework agreement with the White Housewhich also provides for the imposition of a 15% duties on most goods – thus ending months of intense rumors and uncertainty.

The latest development will be a particularly welcome development for markets, which had discounted the possibility of significantly higher duties in both directions – a development that would probably have a significant impact on the global economy. Although many details of the agreement have not yet been finalized and the duties themselves will probably have some negative impact on growth, investors have been relieved that the worst scenario was avoided.

The activity on the currency market this week will undoubtedly be determined by the impact of trade agreements and from any news about progress in the latest negotiations with other countries. Purchases should also assimilate the FOMC meeting decision for July on Wednesday.

Sterling

The pester continued to lag behind against more main coins Last week, as another round of frustrating financial figures intensified fears about the situation of the British economy. June retail data and the complex index of PMI business activity for July have unexpectedly retreated and confirmed the image of an economy that remains stagnant. The news that the United Kingdom’s government borrowed more than expected in June is stepping up pressure on Finance Minister Rachel Ribs, which will almost of course be forced to re -increase taxes in the fall to avoid a fiscal impasse.

The rapid deterioration of the economy puts the Bank of England in front of the dilemma: Will the Monetary Policy Committee give priority to the development and market market or price stability? Although we believe that a 25 -meter interest rate reduction. It remains very likely in August, fears of inflation may limit the rate of further reductions later.

Euro

Reports that the EU It was approaching a framework for a framework with the US with the common currency in positive territory last week. However, investors have avoided committing to important positions, and it remains to be seen whether they will do so now that the agreement has been finalized. The European Central Bank was not surprised last week as it kept interest rates unchanged and reiterated that monetary policy is in a “good spot”. However, Christine Lagarde did not appear in favor of an additional interest rates as we expected, expressing confidence in inflation, avoiding degrading the value of the euro.

Now that the US-EU trade agreement. It is a fact, we are quite confident that the ECB will keep interest rates steady for at least the next two meetings – and it is not excluded that the Board of Directors has already made the latest interest rates of the current cycle. Preliminary GDP data for the second quarter and July inflation will be published on Wednesday and Friday, but the euro is likely to be more affected by trade developments than anything else.

US dollar

The American economy still does not show signs of deceleration. Businesses are largely resistant to the uncertainty caused by Trump’s duties, at least according to the S&P PMI composite index for July, which recorded its highest price since December. There is also no wave of layoffs in the labor market – new unemployment benefits have fallen to the lower levels than April. It is a slight surprise that the recent power of the US economy has not yet been reflected on a stronger dollar, but this is probably due to prolonged concerns in the face of the deadline for imposing duties on Friday.

In addition to trade developments, markets will focus on the Fed Monetary Policy decision on Wednesday. Although we do not expect interest rates change, there is likely that individual divergent votes in favor of immediate reduction. President Powell, however, is expected to shift decisions for later, reiterating that more data is needed for the financial consequences of duties and that the Fed will have a better picture after summer.