The U.S. gained in late trading last Monday following the United States and Mexico deal that averted the imposition of tariffs. Meanwhile, Euro plunged as sources noted that European Central Bank was ready to slash interest rates if economic growth slacks off.
U.S. President Donald Trump initially posed a threat to implement 5% import on all Mexico imports beginning on Monday should Mexico fail to do anything about tightening its borders.
Last Monday, Trump said that the imposition of the tariffs on Mexico was indefinitely suspended after reaching a signed agreement. On Friday, Mexico committed to quickly expatiate on an asylum program and assign security forces to manage the course of Central American migrants passing through the U.S. border.
Richard Franulovich, Westpac Banking Corp head of FX strategy in New York, said the news on the tariff suspension on Mexico is the most significant reason why the dollar had a bounced back overnight.
In the previous week, the dollar went down as worries that disputes on trade may hurt the global economy. Data on U.S. jobs also was more feeble than expected, supporting assumptions that the Federal Reserve would trim interest rates.
On Monday, jobs data displayed a better outlook, with job openings in the U.S. falling in April after hiring soared to a new record.
The ongoing trade war between the U.S. and China and concerns that Trump will impose tariffs on Europe and Japan will most likely steer away investors from stacking up on riskier assets.
Franulovich stressed that the market psyche might have been unnerved and this will progressively be the sentiment’s headwind. He noted that there is the current issue with China, and additionally, many other nations are in Trump’s radar.
Trump said last Monday that he is open to slapping another series of corrective tariffs on imports from China if he fails to ink a trade deal with the Chinese president at the G20 summit taking place later this month.