Friday, 20 July: US President Donald Trump once again put himself in focus over comments on the US’ Federal Reserve’s interest rate path. Trump has said he wants the Fed to stop raising rates, further adding that when rates in the US are raised, the US dollar subsequently strengthens. The Fed are on track to raise rates twice more in 2018 (the next rise is expected in September), but Trump has insisted he won’t interfere with the decision making. The dollar weakened against major currencies, giving the pound a positive end to the week. Sterling has been beaten up after a string of UK data releases, but today’s higher than expected public sector net borrowing (£5.4bn vs exp. £5bn) did little to alter sterling strength. GBP/USD is back over $1.31 at the time of writing.
Before the first trade tariffs on Chinese imports has even set in, Trump has declared further tariffs, and again, intensifying his trade war between the two largest economies. $200bn of tariffs have previously been declared on 6,000 good, set to come in to force in September, but Trump has announced a further $500bn on all imported items.
It was a relatively quiet day on London indices as the week came to a close with the 100 and 250 closing close to flat on the session; -0.07% and +0.09% respectively. Ahead of its trading update on Monday, Ryanair hit headlines for the wrong reasons as strike action by Ireland-based pilots has forced flights to be cancelled. 4,000 passengers have been affected today and a further 16 flights between the UK and Ireland are to be cancelled on Tuesday. German Chancellor Angela Merkel has weighed in on Trump’s threats to European car tariffs; the ongoing threats further impacting the export heavy German DAX as it closes 0.90% lower. US equity indices are fairly muted as we end the week as Trump’s trade threats weigh on global markets.