Markets are again forced to react to a high probability of expanding the negative impact of US duties on the world economy, which is noticeable again in the dynamics of the currency market, and not only that.
At the end of the week, the Chinese authorities announced that they would reduce the RMB exchange rate against the US dollar, which would largely offset the imposed trade duties by Washington with respect to Beijing. Artificial depreciation of the yuan, and the authorities "under heaven" have every opportunity to do this, which will lead to the fact that the demand for imports from the US will fall, and US companies will suffer losses. But this news is not enough and Trump would not have been in full measure if he had not once again started threatening, waving a customs "baton". First, he made it clear that the US could prohibit Chinese investments from entering the country, and then "heated up" saying that it could impose a 20% duty on cars from the EU if Europe responds to the already introduced US new duties on metals.
Here, such a tense and difficult picture was formed at the beginning of the European trading session. Trading of Asia today is in the red. Similarly is expected in Europe and, it seems, the States, according to the dynamics of futures for major stock indexes.
Estimating the likely current trends, we can assume that investors will show a high degree of caution. It is likely that during the day, the defensive assets will be in demand, the Japanese yen, the Swiss franc, as well as the government bonds of economically strong countries. Thus, the profitability of the benchmark of 10-year-old Treasuries at the beginning of electronic trading in Europe is already decreasing by 0.93% to 2.871%. Although on Friday, it still made an attempt to grow to 2.890%.
As for the dynamics of the foreign exchange market, the US dollar can be supported, of course, safe havens are exempted n the wake of a drop in demand for risk and a stable view of market players, which, in the wake of deepening and expanding trade conflicts between the U.S. and its major trading partners as America the least affected.
Today, important economic data is not expected to be published, so the whole attention of the market will be concentrated, as before, to the Twitter of the American president.
Forecast of the day:
The EUR/USD pair is trading above the level of 1.1630, overcoming on the wave of investors' departure from risk may lead to a local price decrease to 1.1590.
The GBP/USD pair is testing the 1.3225 mark against the same background as for the euro reasons. If the price is fixed below this level, we can expect its limited reduction to 1.3140-45.