In its regular economic bulletin, the ECB has stated on Thursday that there is an increased risk towards global growth due to the threat coming from the higher US tariffs towards Europe, as well as the possible retaliation of the affected countries. This view is in line with the policy statement published in July. Furthermore, according to Reuters, the ECB warns that if all the measures that were threatened would be implemented, the average US tariff rate would reach the levels that were not seen in the past 50 years.
In addition, the World Trade Organization predicts that the global trade in goods will lose its momentum in the 3rd quarter, again due to the trade tensions, which are slowing down the export orders, as well as the production and sales of automobiles. The growth is expected to be just above the trend and the quarterly outlook reading, composite of 7 forward looking components including the merchandise trade volume, export orders, automobile production and sales, electronic components, agricultural raw materials, international air freight, container port throughput, showed 100.3 yesterday, down from 101.8 in May.
With regards to the macro-economic news, the US unemployment claims reading with a pleasant surprise, where the number of US citizens failing for unemployment benefits fell to 213k from expected 220k, which is signaling that the strong American economy is helping the labor market. It is important to mention that the initial claims are being closely monitored as there were reports of companies laying off workers or planning to as a result of the import tariffs.
The protectionist trade policy imposed by Trump’s administration has left the US involved in retaliatory tariff from its major partners such as China, Mexico, Canada and the EU, leading towards dissatisfaction of manufacturers who are complaining about the increased price of steel and aluminum that is having an effect on the production cost and is disrupting the supply chain. However, the US producer price index (PPI) showed a stagnation yesterday and the producer prices were unchanged in July, but the economists believe that the July’s reading is somewhat temporary against the strong US economy and labor market.
ECONOMIC CALENDAR EVENTS FOR AUGUST 10th
AUD RBA Monetary Policy Statement
GBP GDP m/m
GBP Manufacturing Production m/m
GBP Prelim GDP q/q
GBP Goods Trade Balance
GBP Prelim Business Investment q/q
CAD Employment Change
CAD Unemployment Rate
USD CPI m/m
USD Core CPI m/m