Trump/Xi meet went OK but no firm agreements

Good morning

Another day of GBP weakness against both USD and EUR, seeing lows of 1.3210 and 1.1615 before a late recovery pushed GBP from those lows into the London close.  The recovery was brief and shallow, and as I type we are back towards those lower levels.  US bond yields made recent highs again yesterday although worth noting that EU and UK bond yields are also at historically elevated levels.

USDJPY has dropped from yesterday’s highs around 159 to trade just below 158 as Japan FinMin Katayama reminded markets that coordinated US/Japanese intervention remained a viable option.  Reports are that Trump expressed concern over the weak Yen level when he met Japan PM Takaichi earlier in the week.  GBPJPYis currently 100 pips lower than yesterdays high, now 209.15. 

Trump/Xi met yesterday and all seemed to go reasonably smoothly, both leaders talked of being friendly and keeping communications open although there was little really substantial to come away with.  Taiwan was a big topic with neither side giving ground despite Xi calling on US to oppose Taiwan independence.  The two month extension of the trade truce from November to January may sound helpful but the feeling in China would have preferred that to be longer.  Overall Xi’s take was US and China can both prosper through the right cooperation.

Oil prices dipped yesterday amid some reports of talks between Iran and US in opening the Strait of Hormuz, we are currently trading around $3 off yesterdays highs.  The US did question whether the SoH was actually under any control of Iran and therefore whether they should have any say in whether the Strait was open. 

In weekend sport, Spurs are guaranteed not to lose as we are on the international break.  England take on Spain on Saturday evening, I am hoping England bring the flair, positivity and enjoyment we all felt during their world cup third/fourth play-off match against France.  F1 returns this weekend from Baku in Azerbaijan, the race is midday on Sunday.

Next week we move into October and if that sounds alarming, remember that today we are exactly three months from Christmas.  Next week will be a big one in terms of data, with RBA rate announcement, Aussie CPI, UK Q2 GDP and EU inflation.  From the US we will have Core PCE, ISM PMIs, and employment numbers, with the highlight being the nonfarms on Friday.

Looks like we’re forecast to have a bit of rain next week so make sure you enjoy the dry weather over the weekend.

Have a great day, and a great weekend as and when it comes…

-  10.15 Feds Williams speaks

-  13.30 US durable goods

-  15.00 US Michigan sentiment survey

-  19.00 Feds Hammack speaks

-  19.00 ECBs Vujcic speaks