This week’s trade agenda is hot: Trump’s threats to exit WTO (World Trade Organization) and preparations to step up the trade war with China; NAFTA negotiations between Canada and the USA at the final stage; Juncker’s statements about tit-for-tat car tariffs if USA makes the first step.
NAFTA: There is no deal between USA and Canada yet, although, Mexico, the third party gave its green light on Monday. Time is running out as the Mexican President has to sign the pact prior to leaving office at the end of November. NAFTA high-level negotiations between the USA and the Canada continue for a third day following US-Mexico bilateral agreement on Monday. The two trading partners are working against the clock ahead of today’s deadline to make the final arrangements. Although there are red lines, there is also hope that the long-lasting talks will lead to a deal. High-level officials expressed optimism on Thursday about reaching an agreement by Friday.
JUNCKER: The European Commission President stated that if the US President does not honour the agreement not to impose car tariffs, EU will respond accordingly. Trump recently rejected an EU offer to eliminate tariffs on cars. He added that EU’s trade policies are “almost as bad as China”. The US administration had agreed back in July to hold back on threatened 25% car tariffs.
WTO: The U.S. President Donald Trump threatened to withdraw from the World Trade Organization on Thursday “if they don’t shape up”.
US-China trade war escalation: The US administration is ready to escalate the trade dispute by imposing tariffs on $200 billion more in Chinese imports. This would be the second phase of this trade war. The world’s two largest economies have already imposed tariffs to $50 billion of each other’s goods.
Forex Market and Trade Agenda
The safe heavens such as yen and swiss franc were benefited ahead of global trade war escalation.
The Dollar traded broadly flat against the Euro amid trade concerns which hit the single currency.
The Yen was boosted by such traders’ concerns, rising by 0.6% on Thursday and 0.2% on Friday.
The Swiss Franc inched up, for the sixth, consecutive, day against dollar in a new 4&1/2-month peak.
The Euro fell 0.1% against the US Dollar following Trump’s comments that EU’s trade policies are “almost as bad as China”.
The Sterling got positive vibes on Brexit hopes but a no-deal Brexit caps gains. The pound edged up close to a one-month high against the greenback.
Oil inched up amid trade worries. However, US sanctions over Iran and disruptions to crude supply from Venezuela capped losses. Brent crude futures dropped 40 cents a barrel, while U.S. crude futures dropped 50 cents from their last close.
Gold prices inched up today due to a lower dollar and world trade worries following Trump’s threats. Silver traded flat.
Sources: Reuters, CNN money, BBC
PLEASE NOTE The information above is not investment advice.