Calling Trump "obsessed" is probably not a winning strategy – at least not for the euro. The common currency is unable to benefit from the dollar's weakness.
Phil Hogan, the European Commissioner for Trade, told a conference in Washington that President Donald Trump is obsessed with America's trade deficit with the old continent. Moreover, he criticized the Sino-American trade deal that includes Chinese commitments to buying US goods – a potential violation of international commerce rules. Hogan is in the American capital to discuss Trump's threat to slap tariffs on French goods following France's "tech tax," which is imposed mostly on US companies.
These trade tensions have contributed to paring EUR/USD gains, triggered by several positive developments. The European Central Bank's meeting minutes were cautiously optimistic on Thursday. The bank sees indications that core inflation is rising and that the manufacturing slump is contained.
Euro/dollar has also struggled to recover from upbeat US Retail Sales which beat expectations on all accounts – including an increase of 0.5% in the all-important Control Group. Yet while other currencies recovered against the greenback, the common currency stayed behind.
The University of Michigan publishes its preliminary read of Consumer Sentiment for January late on Friday. Economists expect ongoing optimism in consumption – the driver of the US economy.
See US Michigan Consumer Sentiment Preview: No change is good
China reported annualized Gross Domestic Product growth of 6% in the fourth quarter, as expected. While this marks a slowdown, investors were encouraged by the yearly jump of 6.9% in industrial output in December and fro other indications of robust economic growth in the world's second-largest economy.
Alongside the trade deal with the US, the prospects for China and the rest of the world look promising. Stock markets are cheering and the safe-haven US dollar and Japanese yen have come under selling pressure. Yet as mentioned earlier, the euro is unable to benefit from the dollar's descent.
Will the EUR/USD remain under pressure? Trade tensions and consumer data will likely move the pair.
One thing that is unlikely to move markets is Trump's impeachment trial. While the political drama may be of interest, the president will surely be acquited as Republican Senators are unlikely to vote against him.
