The ongoing escalation in trade tension has resulted in more downside pressure on risk assets, with US equities continuing to get hit hard. As a consequence, the US dollar has been trading with more of a mixed tone of late—more bid up against the risk-correlated currencies but getting sold against the other majors, which are now viewed as possible alternative safe haven options at a time of so much unpredictability around the state of the US economy.
Of course, signs of upward pressure on inflation are making things that much more difficult, as it takes away the ability for the Fed to be leaning towards more investor-friendly monetary policy.
Earlier today, we got a mixed bag of inflation reads out of the Eurozone. Meanwhile, ECB’s Lagarde was on the wire saying Trump trade measures would hurt global growth. Looking ahead, we get Chicago PMIs and Dallas Fed manufacturing.
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