The trade tensions between the US and China have caused overall speculations about the currencies and their role in the trade talks.
For example the Chinese central Bank Governor Yi Gang said in the IMF and World Bank meeting in Bali, that China will not use the exchange rate as a tool to deal with trade tensions. According to Reuters, he mentioned also that there are plenty of room for interest rates adjustments and that the monetary stance is still basically neutral.
During last week for example ECB Governor Mario Draghi said that the key global risk is a sudden jump in the interest rates. Also the US President Donald Trump has been asking about the Federal Reserve´s monetary policy by quoting that the dollar is strong. For example the US dollar has gained 2,3 procent against euro during a year.
Last week was also very turbulent in the stock markets and for example the UK stocks were down about 10 procent from the year highs – the Wall Street was able to make a positive turnaround and ended positive for the day.
On yearly basis, the US stock have been perfmorning well with S&P 500 -index up nearly by 8,5 % , Nasdaq up by 14,7 % and Dow Jones by 10,9 %. In Europe, the trend has been negative with the German DAX-index down by 11,2 % and the UK FTSE 100-index down by 7,4 %. The euro has traded down 1,5 % agains the UK pound at the same time.
This weekend is also very important for the next week meetings around the Brexit talks. According to Bloomberg, next week EU & UK meetings are vital in accordance for the breaktrough and keeping the timetable.
During the Brexit talks there has been mixed feelings about the future and opportunites among the big corporations. For example Unilever (UNA:NA), consumer goods company, decided to stay in London, while many of the financial services companies like Goldman Sachs have decided to move some of ther personnel to Frankfurt or Paris. According to Bloomberg, these companies have got a new banking license from Germany: Morgan Stanley, Nomura, Citi and Daiwa.
One of the reasons for the financial companies to departure to Frankfurt has been the ECB´s policy stand of the banking requirements after the Brexit. Companies have made conclusions that it would be easier to operate with a new licence in Frankfurt.
On the other hand, the UK prime minister Theresa May has said that UK would offer the lowest G20 taxes for corporations in order to keep them in the UK. – Our vision is based on openness, innovation, competition, high quality and intelligent regulation, she said at the end of September in New York and mentioned also that ” no deal is better than a bad deal”.