Markets opened lower yesterday after President Trump directed the USTR to identify $200bn of Chinese goods imports as potential targets for further tariffs, $100bn more than previously. Equities and government bond yields both opened lower before trading sideways in an otherwise quiet session.
JPY was the best performing G10 currency, with both CHF and USD also performing as safe-havens.
Today GBP will be in focus given the House of Commons vote on the Lords’ amendment to the EU (Withdrawal) Bill. Meanwhile, according to the FT, the EU is stepping up its contingency plans for a no-deal Brexit.
The National Bank of Hungary revised its inflation forecast higher and now expects headline inflation to exceed its 3% target “temporarily”. While reiterating that it believes “loose monetary conditions” are “necessary” to achieve its inflation target, the NBH added that “the current volatile international environment suggests a more cautious approach”.
EM central banks will hold the spotlight today, with the BSP expected to hike rates in the Philippines by 25bp. Inflation exceeded the 4% upper-bound of the central bank’s target for a third month in May and the governor noted that the BSP “can’t really be oblivious to Fed actions”. Elsewhere, we expect the BCB to keep policy unchanged in Brazil.