Euro remains steady despite Trump's renewed threats of new tariffs!
US President-elect Donald Trump said on the Truth social network that he would impose tariffs of 25% on imports from Canada and Mexico. Both the Canadian dollar and the Mexican peso fell against the greenback to multi-year lows amid the news. Analysts expect the new tariff pledges could jump-start trade negotiations between the US and its trading partners and are likely to trigger widespread currency market volatility in the coming months.
The euro fell initially before paring losses against the dollar and ending the session flat on Tuesday. It saw little change and settled at just under 1.05 in the early Asian session on Wednesday. However, the common currency experienced a sharp decline against the dollar, sinking to a two-year low of 1.0330 last Friday, depreciating by 6 cents against the euro since November 5 when Trump won the US election. . And it is likely to face further pressure amid current global economic and political dynamics.
Several factors may continue to put pressure on the euro against the dollar. First of all, Trump's tariff threat could encourage protectionist actions by trading partners who exchange local currencies for the royalties - to offset further asset depreciation. This change would increase demand for the greenback, adding downward pressure on the euro.
Second, the Federal Reserve released meeting minutes indicating that officials prefer a gradual approach to rate cuts against a resilient economic backdrop. Some officials even indicated that the bank would hold off on rate cuts if inflationary pressure continues.
The hawkish stance is likely to continue to push the euro lower against the dollar. Third, the euro lacks the fundamentals to counter the dollar's momentum. On Tuesday, stocks in the European auto sector were hit by Trump's new tariff threats. Sentiment worsened across the continent, with all major equity benchmarks ending lower.
Trump said in this presidential campaign that he would impose 10% tariffs on imports from all other countries and 60% on China. If these tariffs materialize, the euro may have to weaken further to support European exporters. Moreover, China's exposure to US tariffs could reduce its demand for European goods, indirectly affecting the eurozone economy.
Kyle Rodda, a senior market analyst at Capital.com warned of possible further weakness in the euro: “If we continue to track as we are and there is follow-through from the Trump administration on tariffs, then I suspect the euro and the yuan will continue to weaken. , especially given that it's only a matter of time before Trump posts something aggressive on social media about a major European economy or China again."
Markets are awaiting the release of the Eurozone's Consumer Price Index (CPI) for November on Thursday, which is expected to rise to 2.3% from October's 2%. Higher inflation could prompt a tougher stance from the European Central Bank (ECB), providing some support for the euro.
US government bond yields have retreated from a four-month high following Trump's nomination of hedge fund executive Scott Bessent as Treasury Secretary. Bessent is seen as less aggressive on tariffs, potentially easing global trade tensions. A slowdown in dollar strength could provide temporary relief for the euro, as currency trends are often positively correlated with bond yields.
Poll
Why are new nuclear projects still too expensive in Europe?
Nuclear power is poised to play a crucial role in Europe's decarbonisation and energy security efforts, but the financial and logistical challenges of......
Balluku inspects the works in Lot 7 of the Great Ring Road of Tirana, where the laying of asphalt layers has started!
The laying of asphalt layers in lot 7 of the Great Ring Road of Tirana begins. With a length of nearly 2 kilometers, this lot is expected to be ready in a......
Which EU countries have the most foreign-controlled enterprises?
Foreign-controlled companies have a significant impact on the EU economy, even though they account for only 1% of all market producers. Despite their small......
Italy, Russia's top trading partner in the EU - Trade between Rome and the Kremlin grew by almost 20% in September 2024
Italy became Russia's top trading partner among EU countries in September 2024, overtaking Germany, which had led the ranking for six months. These data come......
Mazniku in the Special Anticorruption Commission: The registration of municipal properties should be facilitated
The Minister of State for Local Government, in his speech at the Special Anticorruption Commission, emphasized the work that needs to be done to facilitate......
Fewer loans for new businesses - According to the Bank of Albania, the loan stock is decreasing
Individuals and businesses have begun to take less and less loans to open a new business. The latest data from the Bank of Albania show that the total loan......
"Property legalization, the 2028 deadline is achievable" - Rama: Help from technology. Russia: Only 2.9% of requests, reviewed
The deadlines for completing the processes related to the legalization of properties are within reach, according to Prime Minister Edi Rama. During the......
November 28-29, Albanians "travel" - Zani: The numerous days off and cheap flights affected
With the arrival of the holidays on November 28 and 29, many individuals, mainly from the administration, choose to spend the holidays abroad. Four days of......
