Forex Market Impact on US 25% Tariffs on Auto Imports
With US plans of imposing 25% tariffs on auto imports, Forex market was in dire straits prior to the European markets opening. The usual risk-off asset classes were better bid while risk sentiment was poor.
Recently, Donald Trump had sent a letter to Kim Jong Un, North Korea President, canceling the meeting. As a result, markets dropped in Europe including early pre-markets offers after the said headline had surfaced.
The tariffs on auto imports offered a trade between a range of 109.75 – 109.10 in London. Thus, this inflicted a heavy basis on USD/JPY. The pair closed at 109.19.
Auto imports such as metals in Australia became more stable as copper hit the table with a bid to 3.1054. This made the AUD/USD carry a 0.7582 adjustment.
In Forex market trading, DXY traded the US dollar within a range of 93.6080-93.9780. The US 10-year treasury yield went on a two-week low – from 3.01% to 2.95 % decline – down to 2.97 %. However, following the FOMC minutes yesterday, they went down to 2.51% over the last two sessions.
The UK, however, attained a progressive scale with the short-term support of retails sales data to sterling. GDP/USD, compared to expected UK retail sales last April, boosted a 100-hr SMA on the release.
In New York, Euro opened between 1.1720. For the session, it ranged between 1.1710/55. The greenback went close to 1.1722 as a new breakdown of the US yields weighed on it. The political uncertainty in Europe contributed a heavy basis of trading to the pair. Within a range between 1.3422 – 1.3351, the pair currencies was ending the NY session at 1.3383. However, the pair eventually closed at 0.8757 from a 0.8738 trade which bounced back to 0.8771.
Forex Market – Italy, Spain political turmoil cause Euro dent, Yen surge higher
The euro posted its lowest point as the ongoing political turmoil in Italy and Spain pondered. While Yen emerged safe-haven gains amid risk prevalent risk aversion.
EUR/USD went down to 1.1591 – its weakest entry since November 11.
President Sergio Mattarella hampered nomination of a eurosceptic economy minister. Mattarella’s move provoked the desertion of populist parties in Italy to form a coalition government. A potential election in Italy is expected to happen this year.
This election can cause a shakeup in Europe’s status quo. In fact, investors fear that Italy’s role in the European Union could be seen as a quasi-referendum in reinforcing further anti-euro parties.
While in Spain, a corruption case against Prime Minister Mariano Rajoy with involved members of the ruling party was filed. This made a motion of no confidence in the government.
These series of political events contributed to the sudden decline of Euro in the Forex market. This month, euro went to 4% decrease against on the dollar and yen.
The U.S dollar index reported a strong lift of 0.16% at 94.50 on the back of the weaker euro.
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