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On April 3, Kimberly Clausing, a former Biden administration official and nonresident senior fellow at the Peterson Institute for International Economics, called Trumps tariff announcement on Wednesday "very stubborn and much worse than I expected." "I expected things to be bad, but I didnt expect this level of self-harm. Its shocking that anyone thought this was a good idea. Id be shocked if we can get through this without a recession and Trump doesnt have to reverse his policies."On April 3, some economists worry that if Trump does not quickly cancel the latest round of tariffs, it may push the US economy into a recession. "If the US government implements these higher tariffs without major exemptions, it will be difficult for the economy to digest this. A recession seems more likely." said Mark Zandi, chief economist at Moodys Analytics. Zandi said, "In many ways, the tariffs announced by Trump are even worse than the worst case scenario he envisioned. If they stick to it, I will buckle up and prepare for the impact." Zandi added that on a static basis, tariffs account for nearly 2% of GDP (not considering the impact of tariffs on the economy and taxes), which makes this round of tariffs the largest tax increase since the tax increase used to finance the war during World War II.German Automobile Industry Association VDA: The EU must now speed up and make up its mind on the issue of free trade agreement.On April 3, the Reserve Bank of Australias latest report for the banking industry warned that continued uncertainty in US trade policy "could have a chilling effect on business investment and household spending decisions, and pose a significant headwind to the outlook for global economic activity and inflation." The Reserve Bank of Australia said there was also considerable uncertainty about the impact of possible changes in fiscal, regulatory and other government policies on global growth and inflation.The Hang Seng Index in Hong Kong opened on April 3 (Thursday) down 564.32 points, or 2.43%, to 22,638.21 points; the Hang Seng Technology Index opened on April 3 (Thursday) down 168.53 points, or 3.11%, to 5,257.91 points; the CSI 300 Index opened on April 3 (Thursday) down 219.05 points, or 2.57%, to 8,312.46 points; the H-share Index opened on April 3 (Thursday) down 61.24 points, or 1.59%, to 3,800.76 points.

GBP/USD regains 1.18 thanks to a weaker DXY ahead of Jackson Hole and secondary US economic data

Daniel Rogers

Aug 25, 2022 14:53

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During Thursday's Asian session, the GBP/USD retests its intraday high at 1.1815 while consolidating its weekly losses in response to a dollar decline. The most recent increases in the cable pair could also be linked to expectations that the next British government will be more organized and assertive.

 

The Resolution Foundation, a UK think tank, told Reuters on Thursday that Britain's next prime minister must implement radical ideas, such as discounted power prices, energy bill freezes, or a "solidarity" tax increase for higher incomes, to cushion the energy price shock for a significant portion of households.

 

Ex-Chancellor Rishi Sunak's support for the Bank of England (BOE) and preparations for spending cuts and power bill management kept GBP/USD buyers upbeat. Sunak's chances of becoming Prime Minister of the United Kingdom are enhanced by his moderate pro-Brexit attitude and his financial expertise, especially in the midst of fears of a recession.

 

In contrast, the US Dollar Index (DXY) opened Wednesday on a higher footing before retreating to 108.50, down 0.15 percent as equity markets reduced recent losses in the absence of exceptionally positive US data. Inconsistency in the most recent Fedspeak and market chatter on whether Fed Chair Powell will emphasize his economic concerns at the Jackson Hole Symposium or refrain from making unduly aggressive remarks added to the dollar index's decline against the six major currencies.

 

The July data for US Durable Goods Orders was 0.0%, which was below the predicted 0.6% and the significantly lowered 2.2% estimate from the previous month. However, Nondefense Capital Goods Orders excluding Aircraft above the 0.3% market consensus to achieve 0.4%, up from 0.9% earlier. In July, Pending Home Sales improved to -1.0% MoM from -4.0% expected and -8.9% before (revised down from -8.9%). Annually, the fall in Pending Home Sales was 19.9%, which was less than the prior annual decline of 20%.

 

US 10-year Treasury rates reached a two-month high of roughly 3.10%, the highest level in a week, while Wall Street benchmarks showed moderate increases, allowing S&P 500 Futures to remain somewhat bullish at around 4,150 as of the most recent update.

 

Future calendars will feature the second edition of the US GDP for the second quarter alongside the US Personal Consumption Expenditure (PCE) for the designated period. For new efforts, Jackson Hole will receive the most attention. Morgan Stanley has indicated in its study that the gloomy GDP outlook continues to weigh on the British pound. We do not predict a big decline in GBP from here, despite the fact that GDP projections are already bleak and GBP sentiment is negative.

 

Buyers need confirmation from June's low of 1.1933 to take control of the GBP/USD pair. GBP/USD bears look to be losing momentum at the multi-month bottom, but buyers need confirmation from June's low of 1.1933 to reclaim control.


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