A WSJ report about Trump’s intention to prohibit Chinese companies from investing in U.S. tech firms upset the markets. Worries over a worsening trade dispute between the United States and other major economies affected the FX market.
Asian stocks fell overnight and the pan-European STOXX 600 index was down over 0.5% in Monday morning trade. The report also mentioned that US will block additional technology exports to China.
A rally in the euro lost steam as the US dollar inched up, touched by the trade dispute. Trade tensions determine the near-term direction for the currencies, as investors refrain from risk. Another sign that the latest global trade concerns has curbed traders’ risk appetite is the rise of Yen against Dollar.
In the meanwhile, Chinese and EU agreed to oppose trade protectionism during talks in Beijing on a bilateral investment agreement. The China-EU summit will be held in Beijing next month and hopefully it will end to this bilateral agreement. Pre-summit talks will help to reduce the differences between the trade policy of the two parties.
In other news, oil had rallied on Friday after OPEC reached an agreement over a moderate increase in output. Saudi Arabia finally persuaded Iran to cooperate and the measures shall apply next month.
MARKETS amid Trade Dispute
The dollar inched up 0.2% against its major-traded rivals, nearing an 11-month peak. However, the greenback hit a two-week low versus the safe-haven Japanese Yen.
The Australian dollar dropped 0.1%. The Aussie had fallen to a one-year low last week, amid concerns over trade war escalation.
The Canadian dollar was down 0.25%. The CAD hovered near a one-year low last week, battered by volatility in crude oil prices.
The Sterling moved lower to a 7-month low before EU summit on June 28-29. In the summit Britain is hoping to make progress in securing a favorable Brexit deal with the EU.
The Euro dropped 0.2% to 2018 lows due to traders’ expectations that there would be an extended monetary divergence between EU and US central banks. For the week the single currency consolidated gains, up to 0.5% rise.
Oil prices dropped below 1%, after major exporters agreed a modest production increase during OPEC meeting on Friday.
Sources: Reuters, Euronews, bbc.com
PLEASE NOTE The information above is not investment advice.