The US dollar rose this morning as markets reopened following yesterday’s bank holiday for US Independence Day. However, trade tensions between the US and China have increased today as China has reiterated its demand that the US must lift all its tariffs. Gao Fen, the Spokesman for China’s Ministry of Commerce, said yesterday: “If the two sides are to reach a deal, all imposed tariffs must be removed. China’s attitude on that is clear and consistent.”

In UK news, the Institute of Directors (IoD) survey indicated that businesses are becoming increasingly pessimistic about the economy. 

Tej Parikh, a Chief Economist at the IoD, said: “Dealing with political uncertainty is part and parcel of leading a business, but this has been taken to extremes over recent years.”

As a result, this has dampened market confidence in Sterling.  

The pound failed to benefit from today’s release of the Halifax house price figures for June, despite prices rising to their fastest annual rate since early 2017, increasing from 5.2 percent to 5.7 percent. 

Brexit and the ongoing Tory leadership race will remain in focus today.  

Tensions are growing in Parliament, however, as Chancellor of the Exchequer Philip Hammond has warned leadership favourite Boris Johnson that MPs will likely block a no-deal Brexit.

Mr Hammond said: “The House Commons has been clear already that it does not support a no-deal exit.

That is my position and as a backbencher I will continue to argue against a no deal exit.”

Mr Johnson, however, continues to show support for a no-deal Brexit after commenting that the UK could use the £38bn “divorce settlement” for lavish spending plans, such as his £5bn annual pledge of extra money for schools. 

Later on today will see the publication of the annual US average hourly earnings figures for June.

Any signs of an improvement could further boost the ‘greenback’.

US dollar traders will also be focusing on today’s US employment numbers.

A solid rebound in US non-farm payrolls would be US dollar supportive. 

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