1. Dollar Higher on Upbeat NFP But Trade War Looms
The dollar traded higher against its Japanese counterpart (USDJPY) on Monday after the release of an upbeat U.S. jobs report last Friday. While the dollar rally was refueled today, geopolitical concerns still loom over the greenback. Specifically, uncertainty over potential political risks has risen today amid China’s latest warnings against the proposed U.S. tariffs. “If the U.S. introduces trade sanctions including a tariff increase, all the economic and trade achievements negotiated by the two parties will not take effect,” according to an official statement from China, carried by the Xinhua News Agency. The warning, which added that the negotiating process should be “based on the premise” of not fighting a “trade war,” comes as the two sides wrapped up their latest round of trade talks in Beijing last Saturday.
2. Aussie In The Spotlight This Week
The Australian dollar will be in the spotlight for much of this week amid a deluge of data. Specifically, the Reserve Bank of Australia will hold its policy meeting this Tuesday. It should be noted that disappointing quarterly capital expenditure figures out of Australia last week point to a stale RBA meeting which is seen leaving rates unchanged at 1.50%. It is important to note however, that investors will be looking closely at Australia’s latest GDP figures, due to be released on Wednesday for more direction.**
3. Will the Loonie Rally Continue After This Week’s Data?
The Canadian dollar got a major boost after the Bank of Canada used some more optimistic rhetoric in its meeting last week. Expectations of a July rate hike have shot up as a result, and pushed the Canadian dollar higher against the USD. This morning the CAD edged 0.3% higher against the dollar as of 7:15 GMT. Amid no major economic releases in Canada today, investor sentiment will be determined by global macroeconomic events. The first batch of data to determine whether the CAD rally will be refueled is due this Wednesday and consists of April building permits and trade figures as well as the Ivey PMI for May. The highlight for the loonie though, will be Friday’s employment report. The Canadian economy is forecast to have added 17.4k jobs in May, while the unemployment rate is expected to stay at 5.8%. A stronger than expected jobs report from Canada is seen pushing the CAD even higher against its rivals.***
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*Source: Seeking Alpha