WORLD
Trump is expected to pull United States out of the 2015 Iran nuclear Deal, officially called Joint Comprehensive Plan of Action, on May 12th, which is the deadline given by the US President to the European allies to fix the flaws of the accord, which lifted international sanctions against Iran in exchange for curbing its nuclear program.
Following French President’s efforts upon his last month official visit to the States to urge the US President not to leave the Deal, now is Britain’s turn, through British Foreign Secretary Boris Johnson, to convince Trump to give some extra time to EU major powers to address US concerns and find a generally accepted solution.
Oil prices are indicating a worst-case scenario on Iran nuclear deal. However, renewed Washington sanctions on Tehran may have a wider implication than oil supply and prices, given Tehran’s growing influence in the Middle East crises and its role in Syria and Yemen. Iranian President Hassan Rouhani warned U.S. would regret its decision to exit the deal, characterizing it as an “historic regret”, adding that Tehran would fiercely resist U.S. pressure to limit its influence in the Middle East.
The European Central Bank, by means of a formal Economic Bulletin prepared by ECB researcher Lucia Quaglietti, warned again that an increase in trade protectionism would undermine the global economy and negatively affect potential output growth. Tariff war could endanger the recovery in global trade. The impact of “a generalized global increase in tariffs, higher import prices” may increase production costs and reduce the purchasing power of households.
MARKETS
US Dollar increases back to its 2018 peak against a basket of currencies, continuing its rally over the past two weeks after U.S. jobs and wages data did little to temper perceptions of strength in the U.S. economy.
EURO declined heavily this past week and broke the 1.2000 support against the US Dollar, being under a lot of pressure. On Monday, it fell against most majors ahead of Sentix Investor Confidence Index data. While the euro dropped against the greenback, the pound and the yen, it recovered against the franc.
Sterling traded near its four-month low of $1.3487 touched on Tuesday ahead of BoE Monetary Policy Committee’s decision on interest rate policy later this week.
The Australian dollar corrected lower after hitting its US counterpart on Friday. Aussie is weakening against all major currencies. AUDUSD is down and trading just above 0.7510.
Gold prices ended last week down, recording losses for a 3rd consecutive week, resulting from the recent US Dollar’s rally.
Oil markets on edge as investors expecting the worst ramping up prices reach $70 a barrel for the first time since November 2014, ahead of date on US output, boosted by worries over US sanctions against Iran, as 5 days left by the end of the deadline of the 12th May set by Trump threatening to pull out of 2015 Iran Nuclear Deal unless the EU allies fix it; US crude production is also increased amid the descending oil supply in Venezuela as the economic crisis is getting worse.
Sources: Reuters, Time, CNBC
PLEASE NOTE The information above is not investment advice.