As Trump widens the net on areas impacted by trade tariffs with new import duties to be put on EU products, we may see the USD sold off if this begins to affect the economy despite the Dollar's safe haven status. The USD report below looks at how Trump's trade tariffs could affect the US' global trade position. The table below shows the differnece in USD you could have achieved when buying £200,000.00 during the high and low points of the past month.
|Currency Pair||% Change||Difference on £200,000|
The US is currently embroiled in a trade war in many parts of the world it would seem.
Just a few months ago global equities were selling off due to the fears surrounding Trumps plans to put tariffs on Chinese goods to try and even the playing field in his mind between the US and China.
Since then there have been threats to renegotiate the existing North American Free Trade Agreement with Mexico and Canada, and now the US appears to be locking heads with the EU. Yesterday afternoon Russian President Vladimir Putin made comments implying that he had ‘told you so’ according to Reuters news sources.
Last week Washington imposed trade tariffs on steel and aluminium imports from Canada, Mexico and the EU, and since then the EU has confirmed that it expects to hit U.S. imports with additional duties in July in retaliation to the US’ new measures.
The EU members have supported plans to add 25% duties on up to €2.8bn of US exports.
Although investors usually consider the US Dollar a safehaven currency, I think we could see the US Dollar sold off if the measures implemented begin to hit the US economy. Trump has been the instigator of almost all the new measures, and his approach may isolate the US in the long term. This week he also proposed plans for separate agreements with Canada and Mexico, completely changing the current NAFTA arrangement.
The US dollar has been slowly losing value this week as the global economy shows signs of picking up.
Next week the data begins on Tuesday when at lunchtime inflation data will be released. There is an expectation of 2.1% so expect deviations from this figure to result in movement for the greenback.
After hours on Wednesday there will be an interest rate decision, and although no change is expected any comments afterwards could result in movement within the currency markets.
Retail Sales is then released on Thursday, which is already expected to be a busy day due to the ECB meeting, so it’s certainly worth making us aware of your plans in advance of these events.
For more information on how future data releases could affect your currency requirement, call our trading floor on 01494 725 353 or email me here.
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