Comments made by Donald Trump towards the end of last week worried investors and markets around the world fell. The US president gave an interview to Bloomberg in which he said if the World Trade Organization didn’t shape up he would withdraw the US. In typical style, Trump also said that the agreement to establish the WTO was “the single worst trade deal ever made.”
US treasury secretary, Steven Mnuchin, later said that the idea to withdraw was ‘an exaggeration’, but investors were still jittery. The fact Trump reiterated his desire to impose tariffs on $200 billion of Chinese imports didn’t help matters and neither did his rejection of an offer from the EU to scrap tariffs on cars if America did the same.
Throughout Friday, fears grew that Canada and the US would fail to agree a new trade deal before the deadline for a NAFTA agreement. The White House notified Congress on Friday that it would expect to sign a deal with Mexico ‘and Canada, if it is willing’ within 90 days – although Trump did also tweet that ‘we were far better off before NAFTA’. The dollar ended Friday 2 cents higher against the pound, with slighter greater confidence in the prospect of a deal being reached within the next three months.
The currency markets were fairly sedate, with the pound still hovering around the $1.30 mark. On the economic data front, we saw the UK Gfk consumer confidence index climb three points to -7 in August, beating market expectations of -10. In the eurozone, the flash inflation reading surprisingly dipped to 2% when it had been expected to hold steady at 2.1%. In America, the University of Michigan’s consumer sentiment was revised higher to 96.2 last month, which was better than the 95.5 expected.
