Markets rallied, to close out a strong week of gains, on US equity markets. The confirmation from China, that a trade agreement has been reached with the USA, boosting market confidence. Late in the US trading day, it was announced that trade negotiations with Canada, were completely halted. This was triggered by Canada imposing a new ‘Digital Services Tax’ on US tech firms. The Canadian Government will learn a harsh lesson, and back track very quickly, as they are almost totally dependent on US trade. This coming week is a shortened trading week on US markets, as they close for US Independence Day Friday. The US Dollar remains soft, with the EUR hitting 1.1700, while the GBP rallied to 1.3700.The deadline for global trade agreements is July 9th, which is fast approaching, so NZ and Australia will be extremely nervous. The political leaders from both Countries have been critical of US policy and may experience ‘FAFO’. Trade dependent nations cannot afford poor relations with the largest economy in the world. This is one reason that commodity currencies have not rallied strongly, in the face of an extremely weak reserve currency. The AUD closed out the week trading above 0.6500, while the NZD consolidates above 0.6000, although the next two weeks are critical.
