Market Brief: New day, old news

Trump's actions deepen a trade dispute between the world’s two biggest economies. In case you missed it, this is in reaction to a tit for tat scuffle which occurred over the weekend where President Trump confirmed the US’s intention to add tariffs to US$50 billion of imports from China, with the first US$34 billion tranche effective from July 6th. A few hours later China replied by announcing it will raise import duties on US$34 billion worth of American goods, including soybeans, electric cars and whiskey. If you feel you’ve been hearing about this for months now, and that this seems a lot like old news to you, don’t worry, you are in good company. The JPY rose against all of its Group-of-10 peers as a demand for safe haven assets swept the markets while share prices in Asia slumped. EUR/USD is off its 1.1645 high dropping 0.3% to trade at 1.1589 at the time of writing.
 
GBP remained under pressure yesterday as Theresa May was defeated on her key Brexit legislation in the House of Lords. The Prime Minister now faces another decisive vote in the House of Commons tomorrow as lawmakers backed an amendment to ensure a “meaningful vote” for Parliament on any Brexit deal agreed with the European Union – or on what to do if there’s no deal. The Lords vote, which was widely expected, inserts a clause into the bill that would give Parliament the power to direct the final stage of Brexit negotiations. Parliament, which backs a softer Brexit than the one being pursued by the government, would also be able to block a ‘no-deal’ split. The bill will now return to the Commons on Wednesday for a vote that could determine the outcome of Brexit talks while ministers will hold discussions with potential rebels today to try and convince them to side with the government. GBP/USD has hit its lowest level since November 20th this morning currently trading at 1.3205
 
In the Eurozone Chancellor Angela Merkel accepted a two-week deadline to win agreement on tough migration policy, a concession to her Bavarian coalition partners that eases an immediate standoff without removing the threat of further government tension down the road. Under pressure from Interior Minister Horst Seehofer, Merkel will now attempt to reach a deal with the EU that aims to facilitate the return of migrants to those countries where they were first registered. She told reporters yesterday that this was ‘no easy task’ but that they have a ‘particular responsibility’ to maintain the European project. Merkel will be looking for support on the issue when she meets French President Emmanuel Macron during a joint cabinet meeting at a government retreat outside Berlin today.