Trump Hits Mexico With Trade Tariffs

31 May, 2019

In a shift of focus from China, the Trump administration slapped Mexico with trade tariffs. The administration announced that it will impose a tariff of 5% on goods imported from Mexico from June 10thwith a possibility to hike it to 25% by October.

The tariffs on Mexico were unexpected. However, they are seen as Trump’s way of dealing with the immigration crisis with the southern neighbor. The dollar gained 1.8% against the peso as a result.

Euro Muted as US GDP Revised Slightly Lower


The common currency was flat on Thursday despite some weak reports from the United States. The first quarter GDP’s second estimates were revised down slightly to show a 3.1% increase on the quarter, comparing to the 3.2% increase reported initially. Meanwhile, wholesale inventories rose 0.7%, recovering from the 0.1% decline in March. The weekly jobless claims stood at 215,000.

EURUSD Remains in a Range


The common currency posted a doji pattern on Thursday. This comes as the currency pair remains firmly stuck in the range near a two-year low. Price action closed below 1.1140 and remains hovering slightly above the May 23 lows. A bullish follow-through on the day could see price lifting higher to test the 1.1182 level of resistance.

Oil Slips as Inventory Build-up Continues


Crude oil prices fell 4.5% on Thursday. The declines came as data showed that US inventories of crude oil were high. The US Energy Information Administration (EIA) reported that crude oil stockpiles fell just 282,000 barrels last week compared to the forecasts of a drawdown of 1 million bpd. Meanwhile, an oil tanker with Iran crude oil left the shores heading for China, further putting the US and China to a standoff.

Crude Oil Breaks Past Support – What’s Next?


Oil prices fell sharply breaking the support level at 57.50. This led price to test a fresh two-month low as WTI crude oil closed at $56.43. Any pullback in the near term could see the 57.50 level acting as resistance. To the downside, crude oil prices could now extend the declines to the $50.00 handle. However, this will be left to be seen if the resistance can be established at $57.50.

Gold Pares Losses on Uncertainty


The precious metal pared losses on Thursday as it gained 0.67%, erasing the losses from earlier in the week. The rather volatile move in gold prices reflects the global uncertainty especially in regard to trade. The bond markets once again flashed a red signal with the 3/10-year spread falling to 11.9bps. This led to investors seeking the security of safe haven assets.

Gold Prices Could Extend Gains for the 2nd Week


XAUUSD is on track to potentially extend gains for the second consecutive week. Price action remains flat overall. Following the brief decline lower, gold recovered sharply on Thursday as it broke past the 1285 resistance once again. This potentially shifts the bias to the upside. However, given the current uncertainty in the markets, we expect to see a bit more volatility in the precious metal. [xauusd]


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