HomeContributorsFundamental AnalysisTrade War Fears To Dominate Market Moves This Week

Trade War Fears To Dominate Market Moves This Week

Intense G7 meeting

After imposing tariffs on steel and aluminum imports on its closest allies, the U.S. will be facingenormous criticism at the G7 summit on Friday in Quebec or, as the French Finance Minister Bruno Le Maire likes to call it, “G6 plus one.”

“When you’re almost 800 Billion Dollars a year down on Trade, you can’t lose a Trade War! The U.S. has been ripped off by other countries for years on Trade, time to get smart!” Donald Trump

Whether President Trump is playing a smart strategic game oris seriously considering getting into a trade war remains unknown, but the probability of a full-blown trade war has undoubtedly increased significantly.

The summit is due to take place after the U.S. and China trade negotiations endedon Sunday without any significant progress made. In fact, China warned the U.S. that any move to implement tariffs on Chinese products would ruin the negotiations.

Although markets in Asiaare rallying after the U.S employment report released on Friday showed a robust surge in numbers and new elections were avoided in Italy, thisoptimism will soon disappear if the Trump administration pulls the trigger on the threatened tariffs on $50bn worth of Chinese exports. So, keep a close eye on Trump’s Twitter account for updates.

Europe’s Politics and data to be in focus

The Euro struggled last week, with Italian and Spanish political turmoil sending the single currency to itslowest levels since July 2017. The compromise reached betweenthe Italian President and the populist coalition prevented further losses as a new election seems to be off the cards for now. This relief was reflected in Italian bonds where 2-year yields fell 200 basis points from Tuesday’s high. However, the Euro’s recovery may be short-lived if the new Italian government moves ahead with its proposedmassive spending agenda and tax reductions. These actions will not only create conflict with Brussels but will also invite credit rating agencies to cut their debt ratings.

On the data front, the Eurozone Services PMI is likely to confirm that the economy continued to slowdown as it entered Q2. Another round of negative economic releases will lead the ECB to postpone ending QE and thus drag the Euro further. The UK services PMI, Germany’s industrial production and factory orders will also be in focus this week.

ForexTime
ForexTimehttp://www.forextime.com/
The FXTM brand provides international brokerage services and gives access to the global currency markets, offering trading in forex, precious metals, Share CFDs, ETF CFDs and CFDs on Commodity Futures. Trading is available via the MT4 and MT5 platforms with spreads starting from just 1.3 on Standard trading accounts and from 0.1 on ECN trading accounts. Bespoke trading support and services are provided based on each client's needs and ambitions - from novices, to experienced traders and institutional investors. ForexTime Limited is regulated by the Cyprus Securities and Exchange Commission (CySEC), with license number 185/12, licensed by South Africa's FSB with FSP number 46614, and registered with the UK FCA under reference number 600475. FT Global Limited is regulated by the International Financial Services Commission (IFSC) with license numbers IFSC/60/345/TS and IFSC/60/345/APM.

Featured Analysis

Learn Forex Trading