Amidst a particularly quiet market, news is dominated by the words of US President Donald Trump. On Thursday the President openly criticised the Fed’s rate hike policy after Jerome Powell’s speech to the Congress. He accused the institution of strengthening the US dollar by continuing to raise interest rates and lamented the strength of the dollar, which he says weighs on the competitiveness of companies in the country. Then he lashed out at China and the European Union, accusing them of manipulating their currency as worries about an escalation of the conflict between the United States and its trading partners remain. The sharp decline of the yuan, which has dropped more than 8% since April, to its lowest in a year, thus offering significant additional competitiveness to Chinese exporters, irritated the US President. On the occasion of the publication of the Beige Book last Wednesday, we noted that concern around tariffs is growing among US manufacturers. The Fed reports that all regions of the country are now worried about the trade conflict. In this report, manufacturers in all regions have expressed concern and are seeing higher prices. Some like the motorcycle manufacturer Harley Davidson have been hit twice. A first time with tariffs on steel imported into the United States and a second time when entering their product in the eurozone.

For the first time since last September, the pound briefly fell under of the $1.30 mark. Retail sales figures for the month of June were largely disappointing for the markets as inflation remained below expectations at 2.4%. Investors are already betting on the monetary implications of these poor results before the Bank of England meeting to be held at the beginning of August. The BoE could raise rates at its next meeting, but low inflation and uncertainties around Brexit could delay this decision. For its part, the European Commission has advised the member states to prepare for a Brexit without agreement, while the new negotiator for the UK, Dominic Raab, arrived in Brussels for the first round of negotiations since the resignation of David Davis. And yesterday Theresa May starred in a new plot twist as she announced that she herself was taking the lead in negotiations with Brussels.

While analysts were expecting a 1% increase in interest rates by the Central Bank of Turkey, the latter maintained its monetary policy unchanged. The Turkish lira lost over 3.5% against the dollar before recovering somewhat. President Erdogan had promised during his election campaign that interest rates would fall quickly. One can imagine that this decision was probably guided by these statements and represents an initial attack on the independence of the Central Bank.

The agenda will be a little more busy in the days to come. First of all, President of the European Commission Jean-Claude Juncker will meet with President Trump in Washington today. Considering the US President announced yesterday $12 billion in emergency aid to farmers affected by retaliatory tariff measures, the meeting will take place in a high-charged atmosphere. The monetary policy meeting of the European Central Bank will be held tomorrow, with no changes to the status quo expected. Nevertheless, Mario Draghi’s comments on the slowing growth in the eurozone, according to the PMI index released yesterday, and the impact of the trade war, will be expected. US growth figures will be published Friday. A good number would increase expectations of rate hikes and strengthen the greenback. Then next Wednesday we will have the meeting of the Fed, which will not be followed by a press conference, and the next day that of the Bank of England.

Next week, because of the Swiss National Day, we will not publish a weekly brief.

Levels

EUR/USD  1.1685 DOW JONES 25’241.94
USD/CHF  0.9935 SMI 9‘005.58
EUR/CHF  1.1605 CRUDE OIL 68.76
USD/RUB  63.40
XAU/USD  1’226.00