We use a range of cookies to give you the best possible browsing experience. By continuing to use this website, you agree to our use of cookies.
You can learn more about our cookie policy here, or by following the link at the bottom of any page on our site.

Free Trading Guides
EUR/USD
Mixed
Oil - US Crude
Bearish
Wall Street
Bullish
Low
High
of clients are net long.
of clients are net short.
Long Short

Note: Low and High figures are for the trading day.

Data provided by
Gold
Mixed
GBP/USD
Bullish
USD/JPY
Mixed
More View more
Real Time News
  • Forex Update: As of 20:00, these are your best and worst performers based on the London trading schedule: 🇨🇦CAD: 0.17% 🇦🇺AUD: 0.14% 🇬🇧GBP: 0.13% 🇨🇭CHF: -0.03% 🇪🇺EUR: -0.06% 🇯🇵JPY: -0.08% View the performance of all markets via https://www.dailyfx.com/forex-rates#currencies https://t.co/WHghrcxnkR
  • RT @FirstSquawk: MORE THAN 90 COUNTRIES REQUEST IMF BAILOUT
  • Heads Up:🇰🇷 Consumer Confidence due at 21:00 GMT (15min) Previous: 70.8 https://www.dailyfx.com/economic-calendar#2020-05-25
  • Commodities Update: As of 20:00, these are your best and worst performers based on the London trading schedule: Oil - US Crude: 1.50% Gold: -0.32% Silver: -0.55% View the performance of all markets via https://www.dailyfx.com/forex-rates#commodities https://t.co/kxAE18eIBf
  • IG Client Sentiment Update: Our data shows the vast majority of traders in Ripple are long at 96.43%, while traders in US 500 are at opposite extremes with 77.46%. See the summary chart below and full details and charts on DailyFX: https://www.dailyfx.com/sentiment https://t.co/lmh68Zio6T
  • Indices Update: As of 20:00, these are your best and worst performers based on the London trading schedule: France 40: 0.31% Germany 30: 0.24% FTSE 100: 0.09% US 500: 0.00% Wall Street: -0.00% View the performance of all markets via https://www.dailyfx.com/forex-rates#indices https://t.co/yYNbl2JFoG
  • The anti-risk US Dollar and Japanese Yen edged higher at the expense of the growth-anchored Australian and New Zealand Dollars as US equity futures pointed lower at the start of Asia trade. Get your $GBPUSD market update from @ZabelinDimitri here: https://t.co/eUY9y46j98 https://t.co/Aj3mxhsnDy
  • Commodities Update: As of 18:00, these are your best and worst performers based on the London trading schedule: Oil - US Crude: 1.50% Gold: -0.32% Silver: -0.55% View the performance of all markets via https://www.dailyfx.com/forex-rates#commodities https://t.co/Rrzzjyfqmz
  • IG Client Sentiment Update: Our data shows the vast majority of traders in Ripple are long at 96.44%, while traders in US 500 are at opposite extremes with 77.37%. See the summary chart below and full details and charts on DailyFX: https://www.dailyfx.com/sentiment https://t.co/jjChVG5cqm
  • Indices Update: As of 18:00, these are your best and worst performers based on the London trading schedule: US 500: 1.28% Wall Street: 1.15% France 40: 0.15% Germany 30: 0.08% FTSE 100: 0.01% View the performance of all markets via https://www.dailyfx.com/forex-rates#indices https://t.co/vL9MgyBJF5
Euro, AUD/USD, NZD/USD at Risk From Trump Automobile Tariff

Euro, AUD/USD, NZD/USD at Risk From Trump Automobile Tariff

2018-11-29 04:30:00
Dimitri Zabelin, Analyst
Share:

TALKING POINTS – EURO, AUD/USD, NZD/USD, TRUMP TARIFF

  • Trump looking to propose automobile tariff as part of protectionist policy
  • Proposal sparked by news of GM’s plan to cut Canada plants and salaries
  • Tariff likely to spark retaliation – AUD/USD, NZD/USD and Euro may suffer

See our free guide to learn how to use economic news in your trading strategy

AUTOMOBILE TARIFFS LOOM ON THE HORIZON

Sentiment-linked assets such as the Australian and New Zealand Dollar may suffer soon amid fears of a new automobile tariff that may trigger retaliations. President Donald Trump announced Wednesday that he is exploring new auto tariffs as a way to promote domestic production and protect jobs. This comes as part of his broader protectionist initiatives that has characterized his administration’s economic policies.

GM announced on November 26 that it intends on closing five North American plants in 2019 in addition to cutting salaried staff. In the US, plants in Michigan and Ohio will be closed.

Trump cited the 25 percent tariff imposed on light trucks in the 1960’s during the Chicken Trade War, claiming that it promoted domestic production and job creation. However, after the economic conflict subsided, the US auto industry lobbied Congress to maintain the tax as a way to shield them from foreign competition. The overall result was a loss in welfare and higher prices for consumers.

See our full interactive history of trade wars here

ESCALATING TRADE WAR AHEAD?

After the Trump Administration imposed aluminum and steel tariffs, the EU responded by imposing duties on key US exports e.g. whiskey, motorcycles and orange juice. This came amid the beginning of the trade war with China. The IMF’s 2018 publication of the Financial Stability Report in October cited the trade wars as a leading factor in global risk aversion and instability.

The automobile tariffs would likely further strain relations with China and escalate trade tensions with Japan, a major automobile exporter. The EU would almost certainly impose retaliatory tariffs, considering the Union’s largest economy – Germany – is one of the world’s largest automobile exporters. Other noteworthy auto exporters include Belgium, Italy and France.

AUTO TARIFFS LIKELY TO FUEL GLOBAL RISK AVERSION

Throughout 2018, the US-led trade wars have been a key factor which has exerted downward pressure on cycle-sensitive assets. The Australian and New Zealand Dollar have been on a steady decline as the outlook for global growth remains uncertain. This is also occuring against the backdrop of a Hawkish Fed that has been a noteworthy contributing factor driving risk aversion.

If new automobile tariffs are imposed, the probability of retaliation is fairly high. The Australian and New Zealand Dollar along with the Euro would likely decline as risk aversion tightens its grip. Emerging markets would likely suffer as well. Risk-off assets such as the Japanese Yen and Swiss Franc would likely outperform their risk-loving counterparts.

Trade Wars Weighing on the Aussie and Kiwi

Euro, AUD/USD, NZD/USD at Risk From Trump Automobile Tariff

Risk Aversion Boosting Japanese Yen and Swiss Franc

Euro, AUD/USD, NZD/USD at Risk From Trump Automobile Tariff

TRADING RESOURCES

--- Written by Dimitri Zabelin, Jr Currency Analyst for DailyFX.com

To contact Dimitri, use the comments section below or @ZabelinDimitrion Twitter

DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.

DISCLOSURES

News & Analysis at your fingertips.