The commercial agreement between the US and the EU, announced on Sunday night, was an important issue in the markets yesterday, says CommerzBank’s currency analyst Michael Pfister.
The US dollar benefits from the probability of a risk of decreased recession
“The opinions varied significantly. Some analysts emphasized that the EU had been taken advantage of and had not exploited their strengths effectively. Others argued that the agreement reflected the internal divisions of the EU and the balance of power in their relationship with the US, and therefore was the best possible result.”
“The currency market made clear its point of view yesterday: the EUR/USD fell more than a penny and a half, going down again below 1.16. Approximately half of this was due to a stronger US dollar, and the other half to a weaker euro. This is consistent with the arguments of my boss yesterday that the US dollar has benefited from the probability of a risk of recession. Euro is probably suffering due to the imposition of 15%tariffs, despite recent low expectations.
“However, it remains to be seen if the lowest levels of the EUR/USD will last. The meeting of tomorrow’s Fed should show that the political pressure of the US government is having a gradual effect, with several cuts of interest rates that will probably continue from September. By then, the US dollar should also have begun to weaken again.”
Source: Fx Street
I am Joshua Winder, a senior-level journalist and editor at World Stock Market. I specialize in covering news related to the stock market and economic trends. With more than 8 years of experience in this field, I have become an expert in financial reporting.
