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June

US launches trade war with Canada, Mexico and the EU

Published: Friday 01 June 2018

  • Italy to be led by populist
  • Raft of data releases to end the week
​​By Jonathan Russel

The potential trade war is the dominant theme for the market at the moment after US starts to impose steel and aluminium tariffs on its closest allies in Canada, Mexico and the EU. The move drew strong criticism from these countries and retaliatory measures are on the way. European Commission President Jean-Claude Juncker immediately condemned the move.  Canadian Prime Minister Justin Trudeau criticized Trump’s steel and aluminium tariffs as “totally unacceptable” and announced retaliatory tariffs on CAD 16.6b in US imports.  The Mexican Economy Ministry said there would be “equivalent” measures to counter the US steel tariffs. 
 
Italy to be led by populist
 
Italy took a back seat as the populist government is finally formed. Giuseppe Conte could be sworn in as Prime Minister as soon as today. While a clash between the Eurosceptic government and the EU is inevitable, at least for a short while, the turmoil has abated.
 
Raft of data releases to end the week

UK Purchasing Managers’ Index (PMI) manufacturing is a major focus in the European session, and should indicate the strength of rebound in quarter two in UK economy. Eurozone and the Swiss will also release PMI manufacturing data. However the main focus will be the Non-Farm payroll report from US is the major focus later in the day. NFP are expected to show 190k growth in May. Unemployment rate is also expected to be unchanged at 3.9%.
Pearly Gates

A contractor dies in a car accident on his 40th birthday and finds himself at the Pearly Gates. A brass band is playing, the angels are singing a beautiful hymn, there is a huge crowd cheering and shouting his name, and absolutely everyone wants to shake his hand.

Just when he thinks things can't possibly get any better, Saint Peter himself runs over, apologizes for not greeting him personally at the Pearly Gates, shakes his hand, and says, "Congratulations son, we've been waiting a long time for you."
 
Totally confused and a little embarrassed, the contractor sheepishly looks at Saint Peter and says "Saint Peter, I tried to lead a God-fearing life, I loved my family, I tried to obey the 10 Commandments but congratulations for what? I honestly don't remember doing anything really special when I was alive."  Saint Peter says, “We're celebrating the fact that you lived to be 160 years old! God himself wants to see you!"

The contractor is awestruck and can only look at Saint Peter with his mouth wide open. When he regains his power of speech, he looks up at Saint Peter and says "Saint Peter, I lived my life in the eternal hope that when I died I would be judged by God and be found to be worthy, but I only lived to be forty." "That's simply impossible son," says Saint Peter. "We've added up your time sheets."

Today's Major Economic Releases

Market BST Data/Event Previous Expected
ALL Day Two G7 Meetings    
GBP 09:30 UK: Manufacturing Purchasing Managers' Index 53.9 53.5
USD 13:30 US: Average Hourly Earnings 0.1% 0.2%
USD 13:30 US: Non-Farm Employment Change 164k 189k
USD 13:30 US: Unemployment Rate 3.9% 3.9%
CAD 14:30 Canada: Manufacturing Purchasing Managers' Index 55.5 55.5
USD 14:45 US: Final Manufacturing Managers' Index 56.6 56.6
USD 15:00 US: ISM Manaufacturing Purchasing Managers' Index 57.3 58.3

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