Trade war and Brexit were on focus. The impact of Washington and Beijing’s trade war on the European economy dominated investor sentiment. The pound sinks on Britain general election speculations.
Germany’s export-dependent manufacturing sector remained in contraction in August as weaker demand pushed companies to scale back production and cut jobs. Its sales abroad hit by a worsening trade climate, a global economic slowdown and an increasingly chaotic run-up to Brexit. Most of Germany’s growth momentum and consequently Europe’s growth outlook has dropped.
The United States began imposing 15% tariffs on a variety of Chinese goods on Sunday. China started putting new duties on U.S. crude oil.
The euro’s more than 4% slide this year is a big reversal in fortunes for the single currency. ECB chief Mario Draghi first indicated a likely pullback in its extraordinary stimulus policies in a speech in June 2017. But since then an escalation in trade tensions between the United States and China has sapped demand for the euro. Money markets were assigning a bigger probability of a 20 basis point rate cut on Monday by the ECB this month.
The pound led losers against a broadly firm greenback. British media said Prime Minister Boris Johnson had called an emergency cabinet meeting and was preparing to call a general election.
START TRADINGForex – Trade War and Brexit: Euro and pound dive
With U.S. markets shut for a holiday on Monday, investors remained on the sidelines. Broader market sentiment remained on the back foot too.
The dollar index which measures the greenback’s performance against a basket of six major currencies firmed 0.2% at 99.13.
The euro was 0.3% lower versus the dollar after falling below $1.10 on Friday for the first time since May 2017.
Against the dollar, the British pound dropped 1% to $1.12046 and weakened 0.6% vs the euro to 90.93 pence.
Oil prices weakened on Monday after new tariffs imposed by the United States and China came into force. Concerns about a further hit to global growth and demand for crude were raised.
Brent crude slipped 55 cents to $58.70 a barrel by 1338 GMT. WTI crude was down 38 cents at $54.72 a barrel. Activity was thin due to the U.S. Labor Day public holiday.
PLEASE NOTE The information above is not investment advice.
Sources: Reuters, Investing, CNN money