Daily Market Update

Europe’s Troubles Diminish, New Tariffs Help Yen

May 06, 2019

The U.S. Dollar has remained in tight ranges against most counterparts except the Japanese Yen, which grew stronger by over half a percent as markets globally sank based on news that more tariffs are on the way.

Overview

President Donald Trump showed dissatisfaction with current trade negotiations and has vowed to add tariffs to another $300MM+ to Chinese products by Friday if there is no major progress.

The ongoing battle naturally brought down the optimism that had carried stock exchanges and other commodities last week, thus helping safe-haven items like JPY and CHF slightly. Without much in terms of data until Consumer Price Index on Friday, we shall see if Chinese and American negotiators who will be in talks here in DC this week can create other headlines.

 

What to Watch Today…

  • No major events scheduled for today.

Complete Economic Calendar can be found here.

 

EUR

The Euro is steady following a week that established a renewed sense of hope about the Euro-bloc’s economy. Better than expected Gross Domestic Product and inflation lifted Euro briefly last week, but mixed signals regarding weak manufacturing in Germany held the shared currency from building more steam.

At least demand for orders has increased at the quickest pace since November and if it looks like the Euro-bloc slump is bottoming out, we can expect increases in Euro’s value. Markit Service Purchasing Managers Index in April came out better than expected at a reading of 52.8, beating 52.5 thus things are expanding despite some slow sectors.

 

GBP

The Pound experienced some gains Friday as news came that Prime Minister Theresa May is willing to negotiate with Labour leaders and perhaps come to an agreement that leaves the U.K. in the customs union. Ultimately, it would be an imperfect solution to the Brexit question, but would leave trade concerns behind if achieved since there are countries such as Norway with similar deals. PM Theresa May taking opposition into a room may lead to further optimism, but votes are what she needs and there will need to be more evidence of it in the next few days.

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