Well, it’s official, the Trump Administration has slapped a 25% tariff on 818 Chinese goods, with a total value of up to $50 billion. This action comes on top of the recent decision to impose steel and aluminum tariffs on many U.S. allies, including Canada, Mexico, and the European Union.
The U.S. dollar gained against all major pairs this week. A hawkish Fed and a dovish European Central Bank (ECB) gave the edge to the American currency. U.S. President Donald Trump scored diplomacy points in Singapore by meeting with North Korean leader Kim. Trade war fears were once again at the forefront as the Trump administration announced new tariffs on Chinese goods on Friday. Crude oil prices plunged as supply might be on the rise with heavy anticipation on the Organization of the Petroleum Exporting Countries meeting on Friday.
This is the biggest week of the year and the euro started off on solid footing. It is still having difficulty getting through technical resistance but firm comments from Italian Finance Minister that they will not leave the Euro were supportive.
The euro continued to outperform for much of today’s session after top ECB policymakers delivered hawkish remarks on the eurozone economy this week, leading to some chatter that the central bank may announce its intension to end EQ at the end of the year at the conclusion of next week’s policy meeting.
While the focus of the wider market will undoubtedly remain largely on Italy and the ongoing volatility in the bond and stock markets, some forex traders’ focus will momentarily turn away from politics and back to economic fundamentals today. That’s because we have key data coming from the United States later on today while the Bank of Canada is also scheduled to make a rate announcement.
The U.S. dollar was up against majors pairs on Friday ahead of the release of employment data in America. On a weekly basis the greenback gained against the Canadian dollar (CAD), euro (EUR) and the British pound (GBP), but lost ground against the Japanese yen (JPY), Aussie dollar (AUD) and the Swiss franc (CHF) after five days that featured various geopolitical developments. Holidays in the United Kingdom and the United States will make for a short trading week, but one that will be filled with economic data releases alongside new reports from U.S.-China and U.S.-North Korea relations.
Today has been a little light on the data front with the exception of Canadian employment figures, which were released earlier. Headline employment had been expected to have risen by around 17,800 last month, while the unemployment rate was seen steady at 5.8%. While the unemployment rate did remain at 5.8%, the headline figure disappointed as employment fell by 1,100.
The euro opened the week on a strong note, recovering back to last week’s high near the 1.2450 mark. Price action moved sharply higher on the European open at 2:00 am CT and saw further gains as the U.S. dollar weakened on frothy data and a tweet from President Trump.