Investors who had eagerly awaited the meeting of America's Trump and China's Xi at the G20 in Osaka were determined not to be disappointed at the outcome. They seized upon the US president's subsequent comments as evidence that all would now be well in the relationship between Washington and Beijing. Trump said it had been "a very, very good meeting, better than expected" and investors took him at his word that the trade talks are "right back on track". The USD moved higher, but not far in the Far East this morning.
It did not move far on Friday either. The US personal income and consumption expenditure data were unremarkable, with the PCE price index rising a monthly 0.2% to put annual inflation at 1.5%. The Chicago purchasing managers' index at 49.7 was the first sub-50 reading since the beginning of 2017 while the finalized Michigan consumer sentiment index was better than expected at 98.2.
The euro zone manufacturing sector PMIs all missed analysts' predictions. France squeezed into the growth zone at 51.9: Spain, Germany, Italy and Euroland as a whole missed the 50 cut, with Germany down at 45.0: an improvement on the previous period, but certainly not where the powerhouse would like it to be. Unemployment in the euro zone ticked down from 7.6% to 7.5, a better number than forecast.
In Brussels it looked as though EU leaders were close to selecting a replacement for European Commission president Jean-Claude Juncker. Dutchman Frans Timmermans, though by no means a unanimous choice, looks most likely to get the job of heading Europe's bureaucracy while Bulgaria's Kristalina Georgieva, an economist, is tipped to take over from Donald Tusk as president of the European Council, the group comprised of heads of government. It seems that investors are more concerned with the weak data than the diplomatic progress, and the EUR is down by 0.5% against the USD.
The Loonie ignored a late downturn for oil prices on Friday evening and failed to capitalize when they gapped higher in the Far East this morning. WTI crude is 1.6% above Friday morning's level while the CAD is unchanged against the USD. OPEC and other oil producers agreed at the weekend to extend their brake on production but are noncommittal as to how long the output cut will last. Russia's Vladimir Putin said "We will think about that. For six or nine months. It is possible that it could be up to nine months."
Friday's Canadian economic data showed the raw material price index falling 2.3% in May while industrial product prices rose 0.1%. In theory this improves the situation of manufacturers - lower costs and minutely higher prices - but works against energy producers. The Bank of Canada's Business Outlook Survey noted "a slight improvement in business sentiment".
Today's UK ecostats provided little inspiration. The manufacturing PMI for June came in at 48.0, its lowest level in more than six years. Some of the decline was a knock-on effect of the overproduction that took place ahead of the original Brexit deadline in March, which created high levels of stock. More worrying was the weaker demand from domestic and foreign markets.
Over the weekend prime ministerial contenders Jeremy Hunt and Boris Johnson continued to fish for the support of Conservative party members with a mixture of tax breaks and other bait. Mr Hunt tried to burnish his image as a tough Brexiteer when he told the BBC's Andrew Marr that business owners should be prepared for their companies go bust to ensure a no-deal Brexit. Both floated tax cuts, calculated to appeal to the 150k or so party members who will choose their man later this month. The GBP looked good as London opened this morning but has quickly lost its shine. It is down by 0.3% against the USD.
Inevitably, the prospect of a trade deal between Washington and Beijing made investors less nervous. That meant a downturn for the safe-haven JPY and CHF in early trade today, one that was extended during the European session. The yen is 0.6% lower on the day against the USD.
Ecostats from Japan earlier today were less than helpful, but not particularly instrumental in the JPY's setback. The Bank of Japan's Tankan business survey was vaguely disappointing and the manufacturing PMI was slightly weaker than expected at 49.4.