The U.S. Dollar is trading at its weakest point overall in six months as markets are starting to doubt the world’s reserve currency as a trade war intensifies.
Overview
The big swings this week have been traumatic, with so many changes within days to the globalized system of trade that have made it nearly impossible to make plans ahead.
The White House indeed announced a break on tariff implementation, but the 145.0% tariff on Chinese goods established that the U.S. wants to decouple from China as a main trading partner. China has slapped back with an increase on tariffs from 84.0% to 125.0%. The Buck’s downfall is a reflection of the collapse in domestic markets as there has been capital flight from the U.S. to European equities and others.
In terms of data, Producer Price Index showed evidence of going down as it came in at (-0.4%) versus 0.2% expected for March. While there may be some deflation, traders and investors are primarily concerned about growth in the immediate future. We shall see the University of Michigan Consumer Sentiment at 10 AM.
What to Watch This Week…
- Monex USA Online is always open
The complete Economic Calendar can be found here.
EUR ⇑
The Euro is trading at its strongest level since February 2022 as FX flows are punishing the U.S. Dollar. Data also showed earlier that inflation remains steady in Germany and in Spain, while not deflating like it is in the U.S. The mix of economic turbulence and doubts over growth, as well as inflation, has also increased the odds that the Fed will need to interfere. The weekend could also add to the drama as countries start making a push to get permanent and consistent deals, or at least attempt to in order to get some clearer guidance on the future of trade.v
GBP ⇑
Sterling is trading at its strongest level over the Buck since the start of last October as positive data was revealed in the midst of market turbulence and the Buck tumbling. Gross Domestic Product for the U.K. came in much better than estimated at 0.5% vs. 0.1% for the month of February, while averaging 0.6% over the predicted 0.4% in the last 3 months. With indicators expanding and with momentum behind an economy boosted by some spending,the Pound’s resurgence is merited, but as always, could be short-lived in the current financial environment.
