Markets pressured ahead of tariff announcement

More Trump Tariffs Causing a Wobble in Markets

It’s been a relatively mixed start to trading in Europe on Friday and the US is on course to post small losses at the open, as the focus shifts from central banks back to trade.

US President Donald Trump is expected to announce tariffs on $50 billion of Chinese imports today that will once again stoke fears of a trade war and protectionist policies and likely trigger a response from the world’s second largest economy. Trump has been picking fights with a number of countries on trade in an attempt to address the large deficit the US runs and China is clearly his primary target.

Dollar is King, but trade tensions cap risk appetite

Trump Has Leeway to Put Economy Second After Recent Successes

Markets will always be vulnerable to trade spats between countries and while the response to the G7 meeting may have been quite muted, that more likely a sign of such an outcome being in line with expectations than markets becoming less sensitive to it.

The biggest concern here is naturally that this will continue to escalate and more and more counter-tariffs will be imposed, something that will harm all economies and weigh on investor sentiment. Perhaps Trump feels that the strength of the US economy and recent success in Singapore gives him the breathing room to make a sacrifice on the economy and jobs in an attempt put additional pressure on other countries.

There are a number of economic data releases to look out for today, although they may be a little overshadowed by the US tariff announcement. The UoM consumer sentiment survey, empire state manufacturing index, capacity utilization rate and industrial production figures are all notable releases for the US and will be released around the open on Wall Street so should be of interest.

European stock markets soar as ECB dampens hopes of rate hike

EURUSD Under Pressure After This Week’s Central Bank Meetings

The week’s central bank events may be behind us but they’re continuing to have an influence on the markets today. The euro is paring some gains early in the day after coming under substantial pressure as the ECB laid out plans for the end of quantitative easing and the first interest rate hike.

EURUSD Daily Chart

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As ever, a hawkish shift in policy was accompanied by some very dovish language from President Draghi which sent the single currency tumbling. Combine this with a more hawkish result from the Federal Reserve meeting on Wednesday and it’s no surprise the EURUSD pair is under pressure again despite a brief recovery over the last couple of weeks. The pair found some support around 1.15 last time but may not be so lucky this time around, while 1.13 could be an interesting level.

Economic Calendar

For a look at all of today’s economic events, check out our economic calendar.

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