Over the weekend, political leaders from various G7 nations criticized and condemned the Trump administration’s decision to impose tariffs on the country’s allies, suggesting that the simmering global “trade war” could get worse before it gets better. Traders will be keeping a close eye on comments out of this weekend’s G7 summit to see whether the US will soften its stance, as well as any signs of escalation from other countries.
Meanwhile, the euro has caught a bid today after some decent unemployment data out of Spain, where the unemployment rate has dropped a full 10% over the last five years (from 27% to 17%). At the same time, the FX market remains optimistic ahead of the first EU ministerial meeting for the new Italian political leaders tomorrow. For now, traders believe that the populist government is willing and able to pursue its agenda within the current structure of the Eurozone, and given the stakes, Mr. Di Maio and company may be hesitant to “rock the boat” too much.
