Yuan rises for the second day

Chinese Renminbi continued crawling back from its 11-month lows, supported by a weaker Dollar, PBOC’s verbal intervention and a confirmation by the Chinese officials that China would not be the one to fire the first shots when it comes to the trade war. Both US and China are expected to impose tariffs on $34 billion of the other country’s exports as soon as 6 July. Chinese measures are mirroring Trump’s threats and are a reaction to his decision to punish China for its seemingly unfair trade practices.

The Chinese Yuan was not the only one to rebound yesterday. Some other emerging market currencies received support from the calm market, in particular, all of the most liquid CEE currencies, that were heavily pressured by recent trade tensions appreciated yesterday, with Hungarian Forint leading the gains.

Another positive surprise on the data front supports the Pound

Sterling continued its rebound yesterday, helped by the Dollar weakness and another positive PMI release. The data showed that the activity in the service sector rose from 54.0 in May to 55.1 in June. The index is currently at an 8-month high. The positive surprises we are seeing this week are potentially confirming that the slowdown in the economic expansion in the first quarter probably wouldn’t last, as the Bank of England suggested during its last ‘Super Thursday’.

Today we will get a real cascade of information. Among many central bankers speeches and new releases, the most important to follow will be Mark Carney’s speech, new ADP numbers and weekly employment data from the US. Investors will also look at the new PMI/ISM data from the US, a release that got delayed due to Independence Day. The most important, however, should be the minutes from the last Fed meeting.