Trump and Tariffs are the themes of the market right now, and the backlash from these tariffs has sent The US Dollar tumbling across the board. The Dollar in general is close to a four-month low across a magnitude of currencies, as not only are neighbouring countries retaliating with their own tariffs, but fears rise for the short-term economic pain the US are facing. Recent data also backed this up with a significant deterioration in consumer spending and sentiment, with consumer confidence now at a 15-month low which has only further sparked concerns over an evitable economic slowdown.
25% tariffs against Canada and Mexico took effect from yesterday, and with Trump declaring more tariffs are due to come in April, in particular targeting agricultural imports, a full-on global trade war is at risk of playing out.
The EUR has also played its part in rate swings this morning, with news breaking that the next German government will announce a big fiscal stimulus plan. Specifically committing to a special fund of infrastructure investment of €500 billion over the next ten years which will massively help prop up defence spending as well as boost growth prospects for an economy which had been going through uncertain times of late.
Also helping The Euro was the publication of the Blocs latest unemployment reading. January’s unemployment rate remained at 6.2%, instead of creeping up to 6.3% as was initially expected.
Sticking with The Euro, we have the interest rate decision from The European Central Bank. Current figures suggest a rate cut of 25-basis points will be implemented, providing further relief for consumers and businesses. Even with recent introductions of trade tariffs, it shouldn’t have any impact on tomorrow’s decision. However it may lead to The ECB taking a cautious tone towards the economic outlook off the back of this trade war.
GBP/EUR 1.1973 GBP/USD 1.2828 GBP/AED 4.7134
GBP/AUD 2.0416 GBP/CHF 1.1368 GBP/CAD 1.8463
GBP/NZD 2.2586 EUR/USD 1.0697 GBP/ZAR 23.6084