US tariff policy: not all that bad? – Commerzbank
|The Conference Board's consumer confidence survey is an indicator that is not normally paid too much attention to. However, on the one hand, the current times are probably anything but normal and, on the other, it turned out to be much stronger than expected. In fact, it clearly exceeded the expectations of even the most optimistic analysts in a Bloomberg survey, Commerzbank's Head of FX and Commodity Research Thu Lan Nguyen reports.
Dollar finds support in strong consumer confidence data
"It was obviously not expected that the recent backpedalling on US tariffs, and in particular against China, would lift the mood among US consumers to such an extent. Could the whole tariff hiccup end up leaving the US economy virtually unscathed? That would indeed be positive for the US dollar and would justify yesterday's, albeit only moderate, reaction."
"Unfortunately, I do not share the optimism of the US households surveyed which may be partly due to the fact that the tariffs introduced so far have not yet had a noticeable effect on US consumer prices. But this is undoubtedly still to come. What is more - and I may repeat myself here - is that the uncertainty regarding the final tariffs remains high. Even if the Trump administration has abandoned its absurdly high punitive tariffs against China, it cannot be assumed that trade relations will be restored to the old status quo."
"I am not alone in my scepticism. A look at the FX options market shows: From the market's perspective, the USD crash risks have not noticeably reduced despite the apparent easing of tensions in the US trade conflict. My preferred measure for this, EUR/USD risk reversals, have only moved slightly away from their recent highs. I believe this is justified."
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers.