U.S. Exempts EU From Trade Tariffs After Hitting China Hard
IronFX | Mar 23, 2018 07:08AM ET
US exempts EU from trade tariffs, hits China
- Media suggested that the US will exempt EU from its planned tariffs, while on the other hand it hit China. EU officials welcomed the possibility of the exemption, while China plans retaliation with tariffs on pork, to begin with. The Chinese retaliation action is considered constrained, as the size of the imports affected is considerably lower than the size of the US actions. There seems to be a concern also within the US, for the effect of a wider tariff plan against Chinese products, as prices would rise. Should there be a further escalation of the situation, we could see the US Dollar weakening in the long run.
- Cable spiked briefly yesterday on the announcement of BoE’s interest rate decision, testing the 1.4168 (R1) resistance line, however, continued trading on lower levels later on, in a sideways movement. We see the case for the GBP/USD pair to continue to trade in a sideways manner today, however, with some bearish tones, as financial data to be released today could strengthen the USD. Please be advised that the pair could prove sensitive to MPC Member Gertjan Vlieghe’s speech as well as any fundamental news regarding Brexit or the US tariffs' issue. Should the pair come from selling interest we could see it breaking the 1.4040 (S1) support level and aim for the 1.3915 (S2) support area. Should it come under buying interest we could see it breaking the 1.4168 (R1) resistance level and aim for the 1.4345 (R2) resistance level.
Bolton to replace McMaster as national security adviser
- Trump announced with a tweet yesterday that national security advisor Herbert Raymond McMaster is to be replaced by John Bolton. Bolton is a former Fox News analyst, a hawk that supported the use of military means against North Korea and Iran. Overall, after the appointment of Mike Pompeo as secretary of state and now the appointment of Bolton, a hardening of the US's positions on foreign affairs can be expected. Especially issues such as the Iran nuclear agreement, US-Russian relationships, and North Korea negotiations could be affected by the aforementioned replacements. As uncertainty increases, the USD could weaken in the long run.
In today’s other economic highlights:
- In the North American session, we get the US Durable Goods Orders for February and the US new home sales figure also for February. From Canada, we get the headline CPI and Core CPI rates for February as well as retail sales for January.
- USD/CAD traded in a sideways manner yesterday around the 1.2910 (S1) support line. We see the case for the pair to trade in a sideways manner in the next couple of days, however, be advised that the Canadian inflation data and retail sales growth could support the CAD side of the pair, sending the pair in a bearish mood. Should the bulls have the reins we could see it breaking the 1.3080 (R1) resistance line. Should the bears take the driver’s seat we could see the pair breaking the 1.2910 (S1) support line and reaching, maybe even breaking the 1.2800 (S2) support barrier.
- As for speakers, FOMC Member Raphael Bostic, Bank of England’s Gertjan Vlieghe, Minneapolis Fed President Neel Kashkari and Dallas Fed President Robert Kaplan speak.
Get The News You Want
USD/CAD
·Support: 1.2910(S1), 1.2800(S2), 1.2610(S3)
·Resistance: 1.3080(R1), 1.3200(R2), 1.3350(R3)
GBP/USD
·Support: 1.4040(S1), 1.3915(S2), 1.3775(S3)
·Resistance: 1.4168(R1), 1.4345(R2), 1.4575(R3)
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