Global trade war concerns made a comeback – Danske Bank

Analysts at Danske Bank point out that global trade war concerns have made a comeback, as a response to the US move to levy tariffs on USD50bn of Chinese goods, China said on Friday that it will impose tariffs with 'equal scale, equal intensity' on US imports and cancel its earlier trade commitments.

Key Quotes

“US tariffs are aimed to curb China's industrial advancement, Chinese tariffs are primarily aimed at hurting the commodity producers of the American heartland. The first wave of 25% tariffs will hit USD34bn in goods and take effect on 6 July, with another USD16bn still to be reviewed. Trump pledged more penalties if China follows through and we see a high likelihood that he will increase the amount of Chinese imports subject to tariffs to USD150bn quite soon.”

“EUR/USD is still consolidating around the 1.16 level following last week's significant drop on ECB's dovish rate guidance. Oil headed back below USD73/bbl after news emerged that Venezuela and Iraq together with Iran would seek to block a proposal by Russia and Saudi Arabia to increase oil production at this week s OPEC meeting.”