Why the dollar has conceded the last blow of the trade war between China and the US?

Why the dollar has conceded the last blow of the trade war Between China and the US?

The market has received with relief the news that Washington tariffs will be 50,000 million compared with 60.000 million planned, pointing from Danske Bank.

Analysts expect the euro to find support at inflation data from the eurozone.

Again trade tensions between China and the US captured the attention of investors. Washington has detailed its plans to impose 25% tariffs on some 1,300 industrial products Chinese medical technology, transportation and. And Beijing has warned that it will take measures to counter the decision in the coming days. However, the dollar has held up very well the type and, in fact, remains above 106.50 yen, almost unchanged so far this day. Against the euro and the pound also extended Tuesday’s gains.

The reason that the dollar has shown some muscle must be found, first, improving risk appetite on Wall Street, which was certified with the rise of 1% of American parquet in yesterday’s session. Momentum in equities helped the ‘greenback’ to stabilize after recent declines, but its outlook remains clouded by the incipient trade war.

Second, the reason that the dollar has conceded without much change the new increase in trade tensions is due, according to experts of Danske Bank, “a certain relief among investors that the published tariff plan is finally 50,000 million compared with 60.000 million originally planned. “

This has underpinned the dollar, 1.4065 traded on pounds, despite good economic data released in the UK on Tuesday. “The stronger than expected in the country neither helped nor hurt the currency manufacturing activity because the change was extremely modest, except offset by a downward revision from last month’s report,” said Kathy Lien, founder of BK Asset Management. “There are a lot of UK data scheduled for this week, to be scrutinized closely by investors to see if hardliners validate the Bank of England,” adds the expert.

Who has not received support from the macro lately is the euro. The single currency is changing hands at $ 1.2270, where it expects inflation data in the euro zone, the market anticipates better than last month. Fulfilled expectations that consumer prices have rebounded to 1.4% in March, “the euro will find support in what looks like an attempt to reach the bottom of the channel between 1.2475 and 1 , in 2240 dollars which is encapsulated in recent days, “said analysts at Danske Bank.

However, Lien emphasizes worsening inflation in Germany and the caution displayed by the European Central Bank (ECB) regarding the withdrawal of stimulus. “There is more downside risk than upside for the euro”, says the expert investment firm in New York.

Post Comment