Trade negotiations between China and the US, extended to the second day in London, leaving markets on tender-hooks. These are the most important trade negotiations and without a deal, global trade wars could easily reignite. Attention turned to the souring UK labour market, which has steadily declined, since the Labour Government budget. Who would have thought that raising the tax on employment and increasing minimum wages, would deter employers from hiring? This was bad news for the economy, and those suffering unemployment, but there was a silver lining. Rising unemployment eases the pressure on the labour market and drives recessionary conditions, which is the modern solution to inflation. This will add pressure on to the Bank of England to cut rates further, adding downward pressure on the recently resurgent GBP. The GBP crashed below 1.3500, while the EUR held ground, trading above 1.1400.
All eyes remain on the US/China trade negotiations and the US Dollar regained some ground, forcing the AUD back to 0.6500, while the NZD is retracing towards 0.6000. When the London trade round is complete, attention will again turn to inflation and an important inflation number, is released in the US later today.
