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Hello everyone, today XM Foreign Exchange will bring you "[XM Foreign Exchange]: Is Trump's tariffs bluffing? The trade war risks maintain the power of the US dollar." Hope it will be helpful to you! The original content is as follows:
This is a risk aversion beginning with rich action in the www.centrdom.infoing week as the US dollar (USD) is still supported by the ongoing demand for safe-haven aversion caused by upcoming developments in trade.
After sending tariff letters to more than 20 countries last week, U.S. President Donald Trump threatened to impose a 30% tariff on imported goods from the EU and Mexico on Saturday, which will take effect on August 1.
On Sunday, European www.centrdom.infomission President Ursulavonder Leyen pointed out that the EU will suspend trade countermeasures against new U.S. tariffs until August 1 as it will continue trade negotiations with the U.S.
Earlier on Monday, however, Italian Foreign Minister Antonio Tajani said that the EU had prepared a list of retaliatory tariffs to impose 21 billion euros on the United States without a deal.
These headlines highlight the risks of the global trade war. Investors remained nervous ahead of Tuesday’s release of the most important U.S. Consumer Price Index (CPI) data, concerns over the Fed’s independence increased.
President Trump continued to slam Fed Chairman Jerome Powell, who said on Sunday, "If Powell stepped down, it would be a good thing."
White House economic adviser Kevin Hassett warned over the weekend that Trump might have reason to fire Powell because renovation costs of the Fed's Washington headquarters were overrun.
The U.S. continued its rebound against six currencies last week, the U.S. dollar indexStay above 98.00, the highest level since June 25. Meanwhile, U.S. stock futures have so far been around 0.60%.
Euro/USD fell to a two-week low of around 1.1650 in early trading on Monday, dragged down by U.S.-European trade tensions.
The GBP/USD held its lower position near 1.3450, continuing a correction from its multi-year high as the risk-sensitive GBP drops further against the dollar.
Despite the general rise in the U.S. dollar, the U.S. dollar/yen is still below 147.50, mainly due to the expectation that the Bank of Japan (BoJ) may raise its inflation forecast at its July policy meeting.
The opposite also performed poorly in the risk aversion caused by the trade war, with the New Zealand dollar (NZD) being the main laggard. The Australian dollar/USD fell 0.30% to 0.6560 on the day, while the New Zealand dollar/USD pair fell 0.50% so far.
The USD/CAD has almost no change around 1.3700, and the USD gains are offset by the rise in oil prices. WTI held a 2.6% uptrend around $67.50 on Friday amid increased geopolitical risks.
U.S. President Trump said on Sunday that he would send Patriot air defense missiles to Ukraine. According to Reuters, he will issue a "important statement" on Russia on Monday.
Big market fundamentals:
In terms of www.centrdom.infomodities, gold has gained some safe-haven demand, with an increase of 0.3% to US$3,366.
Oil prices rose slightly amid speculation that Trump could announce tougher sanctions on Russia, including tariffs on major customers who bought Russian oil. Brent crude rose 0.1% to $70.45 a barrel, while U.S. crude rose slightly to $68.50 a barrel.
Euro: The intraday bias of the euro/dollar remains neutral at present. The correction from 1.1829 is underway, but the downside space should be 1.1630 resistance to support to bring a rebound. A firm breakthrough of 1.1829 will resume the rise from 1.0176 and aim at the 61.8% forecast from 1.0176 to 1.1572 from 1.1064 to 1.1927. However, a continued breakout of 1.1630 will result in a deeper decline to 55DEMA (now at 1.1474).
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