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Easing US/China Trade Tensions Hits Euro; Powell Cautions Sustained High Tariff Periods
Published July 13, 2018
President Trump started his UK visit by stating that Prime Minister May’s plans for a soft exit from the European Union would likely end hopes of a trade deal with the US. Trump continued by saying that Boris Johnson, who quit May’s cabinet this week, would be a “great” leader. Trump continues his list of state visits Monday, meeting with Russian President Vladimir Putin.
Federal Reserve Chairman Jerome Powell gave a positive valuation of the US economy but cautioned that a sustained period of high tariffs on a wide variety of imports could be damaging to growth. Powell described the US economy as being in a “good place”, with unemployment at its lowest level in years and inflation close to the central bank’s 2% target.
The euro fell to an eight-day low this morning as US inflation numbers boosted interest rate expectations and an easing in trade tensions between the United States and China supported the dollar. EUR/USD was trading at 1.1624 at the time of writing.
Germany held up a final 15 billion euro aid payment to Greece after the government in Athens postponed a sales-tax increase, adding to signs that Prime Minister Tsipras will face increased pressures to regain the trust of euro area creditors as he leads the country out of its bailout program next month.