EUR/USD has recorded small gains in the Friday session. Currently, the pair is trading at 1.1709, up 0.12% on the day. On the release front, Manufacturing PMIs in Germany and the eurozone were within expectations. In the U.S, the focus will be on job numbers, with the release of nonfarm payrolls and wage growth. Both indicators are expected to climb, with estimates of 189 thousand and 0.2%, respectively.
After a brief hiatus, the markets are again facing the nasty reality of a trade war between the U.S. and its major trading partners. On Thursday, the Trump administration made good on its threats and imposed stiff tariffs on the European Union, Mexico and Canada. The EU and Canada fired back quickly, saying they would retaliate with tariffs on U.S products. The U.S had granted all three trading partners a temporary extension, but cited insufficient progress on trade talks as the reason for the tariffs. There are renewed fears that these moves could trigger a global trade war.
The drama continues in Italy, as political leaders scramble to avoid another election, after an inconclusive vote in March. The two largest parties, the League Nord and the Five Star Movement proposed a eurosceptic finance minister, but this was blocked by the pro-European President Sergio Matterella. This triggered a political crisis which led to a selloff of Italian stocks and bonds. The prime minister-elect, Giuseppe Conte, then announced that he had withdrawn his mandate to form a government, and Mattarella invited Carlo Cottarelli, a former IMF economist, to form a temporary technocrat government. There was talk of an election in the fall or even earlier, but Mattarella has agreed to let the two parties have a second go at forming a coalition government.
