The single currency edged 0.2% higher to $1.1239 on Friday and was on track for a second consecutive week of Euro gains.
The euro firmed on Friday and is poised for a second consecutive week of gains. Investors are afraid that any escalation in the US-Sino trade conflict would force U.S. policymakers to cut interest rates.
U.S. President Donald Trump’s tariff increase to 25% from 10% on $200 billion of Chinese goods kicked in on Friday. Beijing said it would strike back. The two sides are pursuing last-ditch talks to try to salvage a trade deal. While U.S. and Chinese officials return to the negotiating table later on Friday, markets now roughly expecting one rate hike by the end of 2019.
The United States escalated a tariff war with China on Friday by hiking levies on $200 billion worth of Chinese goods amid last-ditch talks to rescue a trade deal. U.S. President Donald Trump signaled that talks could drag on beyond this week. In a series of early morning tweets on Friday, Trump defended his decision to raise tariffs.
With negotiations in progress, U.S. Customs and Border Protection imposed a 25% duty on more than 5,700 categories of products.
START TRADINGForex – Second week of Euro gains amid trade war saga
Risk appetite was muted though some of the higher-yielding currencies gained. Still, trade tensions have had broadly little impact on foreign exchange markets. Typical perceived safe-haven assets such as the Japanese yen only gained 1.2% this week. Broader currency market volatility gauges were subdued despite a minor bounce this week.
The dollar index measuring the U.S. currency against a basket of six major currencies, was broadly steady at 97.38.
The Australian dollar was heavily sold this week when Trump unexpectedly ramped up trade tensions, gained.
Sterling held around the $1.30 level after sustaining some losses this week after first quarter British GDP data broadly matched expectations with a 0.5% expansion. Against the euro it dropped 0.1% to 86.36 pence.
Oil prices rose on Friday even as the start of U.S. President Donald Trump’s tariff hike on $200 billion of Chinese goods kept tensions high in the trade dispute between the world’s two biggest economies. Brent crude oil was up 67 cents at $71.06 a barrel by 1145 GMT, having touched a peak of $71.23. U.S. West Texas Intermediate (WTI) crude futures were up 35 cents at $62.05, having earlier hit $62.49.
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Sources: Reuters, Investing, CNN money