Global trade concerns remained high on Thursday and intensified after the New York close as President Trump expanded the trade war with tariffs on Mexico.

Global trade and growth concerns remained high on Thursday and intensified after the New York close as President Trump expanded the trade war with tariffs on Mexico. Weaker than expected Chinese PMI manufacturing data also undermined market confidence.

There was further downward pressure on global bond yields with US benchmarks at 20-month lows and German yields close to record lows.

Equity markets retreated and there was fresh demand for defensive assets as the Japanese yen and Swiss franc strengthened.

The Euro and Sterling remained vulnerable, although the dollar failed to hold its best levels as US yields declined and US reservations increased.

The Canadian dollar lost ground as trade fears increased again after the US move on Mexico.

Bank of England Deputy Governor Ramsden stated that he was a little more pessimistic that the central bank consensus over the growth outlook, although further gradual monetary tightening would be appropriate if there was a smooth Brexit process.

Sterling continued to drift lower as political tensions also remained in focus with no evidence that key political figures were moving any closer to securing a Brexit resolution. There were, however, reports that Germany would back a further extension if there was a second referendum vote. GBP/EUR settled with marginal gains after finding support above 1.1300 while GBP/USD dipped to fresh 4-month lows below 1.2600.

There was further wariness of potential month-end selling with choppy ranges likely to be seen in New York trading on Friday. The Lloyds business survey weakened to 10 for May from 14 as political uncertainty sapped confidence, although there was a recovery in consumer confidence. Sterling was also hampered on Friday by underlying global trade fears and GBP/USD traded only just above 1.2600.

Economic Calendar

Expected Previous
07:00 EUR German Retail Sales (Y/Y)(APR) 1.10% -2.00%
07:00 EUR German Retail Sales (M/M)(APR) 0.40% -0.20%
07:00 GBP Nationwide House Prices (Y/Y)(MAY) 1.20% 0.90%
07:30 CHF Retail Sales (Y/Y)(APR) -0.80% -0.70%
09:00 GDP Prelim YY - 0.10%
09:00 GDP Prelim QQ - 0.20%
09:30 GBP Mortgage Approvals(APR) - 62.34K
10:00 CPI (EU Norm) Prelim MM(MAY) 0.80% 2.30%
10:00 CPI (EU Norm) Prelim YY(MAY) 1.20% 1.10%
10:00 Consumer Price Prelim YY(MAY) 1.30% 1.10%
10:00 Consumer Price Prelim MM(MAY) 0.20% 0.20%
13:00 Germany CPI (Y/Y)(MAY) 1.60% 2.00%
13:00 Germany CPI (M/M)(MAY) 0.50% 1.00%
13:00 Germany Harmonised CPI (M/M)(MAY) 0.60% 1.00%
13:00 Germany Harmonised CPI (Y/Y)(MAY) 1.70% 2.10%
13:30 USD PCE Core Price Index(M/M)(APR) 0.10% 0.10%
13:30 USD PCE Core Price Index (Y/Y)(APR) 1.70% 1.60%
13:30 USD Personal Income (M/M)(APR) 0.40% 0.10%
13:30 USD Personal Spending (M/M)(APR) 0.70% 0.90%
13:30 USD Personal Consumption (Q/Q)(APR) - 0.70%
13:30 CAD GDP (M/M)(MAR) - -0.10%
13:30 CAD GDP Annualized (Q/Q) 0.70% 0.40%
13:30 CAD RMPI (M/M)(APR) 3.90% 2.80%
13:30 CAD GDP (Y/Y) - 1.10%
14:45 USD Chicago PMI(MAY) - 52.6
15:00 USD Michigan Consumer Sentiment(MAY 01) 97 96.9
17:00 FOMC member John C. Williams speech - -
18:00 USD Baker Hughes US Oil Count - 797

*All rates shown are indicative of interbank rates and should only be used for indication purposes only. It is important to note that foreign exchange rates fluctuate and that rates may vary depending on the amount and the base currency that is purchased or sold. Rates are correct as of 8:00am UK time. CentralFX are not responsible for the rates shown.