Canadian dollar weakens after G7
The Canadian dollar is dropping this morning, in the face of deteriorating relations between Washington and Ottawa.
The loonie (as it’s known in financial circles) has shed 0.3% against the greenback to C$1.296.
That’s a modest fall, following Trump’s claim that Canadian PM Trudeau was “very dishonest and weak.”
Trump is particularly angry about Canadian milk, where domestic subsidies and high tariffs protect Canada’s farmers from the vicissitudes of the dairy market.
But that centralised ‘supply management’ system does seem to work; it avoids both bankruptcies and gluts by guaranteeing farmers a decent price. Trudeau is determined to support it.
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South Korea’s stock market has led the rally in Asia today, on hopes that Donald Trump’s next summit will be more productive than his last one.
The Kospi index has gained 0.75% as traders prepared for the historic Trump-Kim meeting tomorrow. There are also gains in Japan and India, although China’s benchmark index has dropped into the red.
David Madden of CMC Markets says investors are hoping for a breakthrough:
The US President left the G7 summit early in order to prepare for his meeting with Kim Jong Un, the North Korean leader. The meeting will take place today in Singapore. There has been a bit of toing and froing about the meeting, but now it seems as if it is finally going ahead.
Last summer there were some volatile sessions on global stock markets on account of the heightened tensions between the US and North Korea because of the regime’s nuclear weapons programme. The meeting between the two leaders could greatly improve political relations around the world.
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The agenda: Markets shrug off G7 debacle; UK trade data due
Good morning, and welcome to our rolling coverage of the world economy, the financial markets, the eurozone and business.
It was a bad weekend for fans of the rules-based international order, as the meeting of top world leaders struggled to meet even the lowest expectations.
Relations between America and the rest of the G7 look worse than ever, after Donald Trump left the meeting early, refused to sign the official communique, and accused his host Justin Trudeau of making ‘false statements’.
Getting all the adults in one room is meant to deliver progress and resolve differences, but not this time. Instead, the G7 has taken another step backwards, with Trump accusing the rest of the world of treating America like a ‘Piggy Bank’.
So, the US is sticking to its new tariffs on steel and aluminium, and Canada is vowing to hit back with its retaliatory tariffs on US goods from July 1 – despite being accused of treachery by Trump’s economic advisor.
The scale of the debacle suggests that the alliances and structures build up over the last 70 years are now creaking alarmingly, raising the dangers of a full-blown trade war.
The financial markets, though, are remarkably unconcerned by events in Quebec.
Asian stocks have risen overnight, with Japan’s Nikkei gaining 0.5%. European markets are expected to rally too; Britain’s FTSE 100 is expected to creep higher today too.
Mike van Dulken (@Accendo_Mike)
#FTSE100 called +16pts at 7697 pic.twitter.com/SKbmPNDxqH
June 11, 2018
Neil Wilson of Markets.com says investors are shrugging off the G7
“Markets appear able to shake off geopolitical risks with stocks showing firmness in the face of a pretty torrid weekend for free trade. Asian shares have risen and futures point to the FTSE opening up around 0.2%, with smaller rises for the DAX and CAC.
After a stormy G7 meeting, the US seems to have turned its back on its allies and is prepared to ratchet up the pressure on trade. Ostensibly this should not be good for risk, though markets appear deaf at present to such rumbings. This is brinkmanship that may ultimately end up working to the advantage of the US; but it is also likely to depress investor sentiment, and therefore growth through the second part of 2018.
Nevertheless, expectations coming into the event were exceptionally low and so there has been little negative reaction in the markets so far.
On the economics front, we get new UK industrial production and trade figures today - plus a new estimate of how the British economy fared in the last three months.
The agenda:
- 9.30am BST: UK industrial production data for April
- 9.30am BST: UK trade balance for April
- Noon BST: NIESR thinktank’s estimate of UK growth in March-May
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