Dollar gains, euro slips after U.S./EU trade agreement
The U.S. dollar surged Monday, while the euro slipped back, after the U.S. and the European Union reached a trade agreement, ahead of this week’s Federal Reserve meeting.
At 04:25 ET (08:25 GMT), the Dollar Index, which tracks the greenback against a basket of six other currencies, gained 0.4% to 97.815, but was still on course for a weekly drop of around 1%, its weakest performance in a month.
Dollar boosted by trade deal; Fed looms large
U.S. President Donald Trump and European Commission President Ursula von der Leyen announced a deal in Scotland over the weekend, with the agreement providing for an import tariff of 15% on EU goods, half the rate that was threatened to take place at the start of next month.
Trump added that the EU also plans to invest about $600 billion in the United States and dramatically step up purchases of American energy and military equipment.
The pact is similar to one forged with Tokyo negotiators last week for Japan to invest some $550 billion in the United States and a 15% tariff imposed on its cars and other imports.
As concerns subside about the economic fallout from punishing tariffs, investor attention is shifting to key economic data and central bank meetings in the next few days, particularly by the U.S. Federal Reserve.
“The U.S. macro data includes jobs data (JOLTS Tuesday, NFP Friday), a likely bounce back in second quarter GDP on Wednesday and stickier inflation on Thursday (June core PCE), which should tick back up to 0.3% month-on-month,” said analysts at ING, in a note.
“This should leave the majority of the Federal Reserve comfortable in their patient position on interest rates (FOMC meeting on Wednesday) and see a further pricing out of the prospects of a September Fed rate cut.”
Source: Investing.com
