Fundamental Comment

This Week: Focus to remain on updates from Trump’s tariffs

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The most important events this week that could weigh on the movements of major currencies will be the final gross domestic product for the fourth quarter in the United States and the United Kingdom.

Noting that, political issues could have bigger impact on the currencies movements this week amid the escalating global trade war jitters.

US Dollar

The U.S. dollar remained under pressure last week due to fears of a global trade war and after the Federal Reserve’s interest rate hike decision. 

President Donald Trump signed an executive memorandum that would implement tariffs on up to $60 billion in imports from China, where the later responded by announcing a list of 128 U.S. products as potential targets for tariffs imposition.

Hence, eyes will focus on any updates from the matter to see whether Trump would revise his tariffs policy or grant China a special treatment.

As for economic data, eyes will focus this week on the final fourth-quarter GDP, which may show an ease in expansion to an annual 2.4 percent, compared to both initial and third quarter growth rates of 2.5 percent and 3.2 percent respectively.

The core PCE inflation index may signal a 0.2 percent increase in February and a 1.5 percent soar on the annual basis.

Pound Sterling

The movements of the pound sterling this week will rely on important economic data including final fourth-quarter GDP.

The reading is likely to confirm a slowdown to 0.4 percent in the last three months of 2017, compared to 0.5 percent growth in the previous three months. The year-on-year reading may ease further to 1.4 percent from an initial of 1.7 percent.

The pound gained support last week after the release of upbeat U.K. economic data and as EU leaders approved guidelines for the negotiation of future relations with the UK after departing the union.

Euro

This week, the euro area lacks the release of important economic data, which may mean the euro would get its direction from the general sentiment in the market.

The euro escaped a fall the previous week as Trump temporarily exempted the EU from the U.S. import tariffs on steel and aluminum until May 1, 2018.

Commodities

Gold posted its first weekly gain in five weeks last week, as worries about a global trade war propelled investors to flock to safe have assets.

The yellow metal also soared after the Fed’s rate hike decision since policymakers preserved their outlook for this year at three interest rate hikes.

Gold may squander its weekly gains this week in case there is an improvement in the sentiment, especially amid any positive news from Trump’s new tariffs imposed on China. 

Regarding oil, it gained help from a statement by Saudi Arabian Energy Minister Khalid al-Falih, who said OPEC and Russia should extend the production curbs until 2019.

U.S. crude inventories may have dipped by 2.4 million barrels in the week ended March 23, following a 2.6 million barrel decrease a week earlier, the EIA government report may show this week. That could help oil prices to resume their rally.

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