Tariff rollback: Has Trump agreed or not?

U.S. President Donald Trump on Friday further magnified the uncertainty, saying he had not agreed to tariff rollback.

His comments came a day after U.S. and Chinese officials reportedly agreed to roll back tariffs on each other’s goods in a “phase one” trade deal if it is completed. Who should markets believe in US-Sino trade relations?

President Trump’s advisers caused whipsaws in markets. The idea of a tariff rollback was not part of the original October “handshake” deal, the sources said.

This underlying uncertainty over whether or not we will get that rollback has been driving the market. Efforts are being made to do a trade deal, which would remove a huge risk to the global economic outlook.

Risk appetite for higher-yielding currencies waned with renewed uncertainty about the rollback of existing tariffs.

Gloomy euro-zone figures and a pessimistic Bank of England depressed the euro and the pound, respectively. The Aussie was hit by the RBA’s unwillingness to raise rates, and the loonie suffered from a loss of jobs in Canada.

The EUR/USD continues to show volatility and declined by 1.3%. It was the worst week for the euro since late August. Data from the United States this week will focus on the monthly inflation and retail sales data.

Dollar/Yen rebounded last week, posting gains of close to 1.0%. Investors await of Preliminary GDP in the third quarter, with a forecast of 0.2%.

GBP/USD declined by 1.2% last week, its worst week since late September as investors await political developments ahead of Britain’s Dec. 12 election. The upcoming week is busy, including Preliminary GDP, Retail Sales and CPI data. The GDP data comes as the Bank of England met last week and left interest rates unchanged. Growth prospects are looking up particularly after recession hit the UK markets earlier.

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The week ahead – Tariff rollback: Has Trump agreed or not?

On Monday (11.11) investors await a batch of UK data including Q3 gross domestic product (GDP) as well as industrial output numbers for September. The British economy contracted by 0.2% in Q2, but a rebound is expected in Q3, with an estimate of +0.2%.
On Tuesday (05.11) New Zealand will release its Inflation Expectations.
On Wednesday (13.11) UK inflation release is expected. CPI was unchanged at 1.7% in September. The indicator is expected to tick lower to 1.6% in the upcoming release. Also, the Reserve Bank of New Zealand will be holding its monetary policy meeting. Experts expect that the central bank will keep interest rates unchanged at this week’s meeting. Wednesday brings October’s US CPI, followed by Fed chairman’s appearance before the congressional joint economic committee.
On Thursday (14.11) investors will be interested in GBP Retail sales which have been soft in latest months. The indicator came at zero in September. The estimate for October stands at 0.2%.
On Friday (15.11), the US Retail sales numbers for October will be coming out. Retail sales fell 0.3% previously and economists hope to see a rebound. Data will shed light on whether the consumer can continue to drive growth in the face of months of trade tensions.

Follow this week’s economic calendar.

PLEASE NOTE The information above is not investment advice.

Sources: Reuters, CNBC, FX street