EUR/USD has posted slight gains on Monday, after sharp losses late week. Currently, the pair is trading at 1.1323, up 0.019% on the day. On the release front, German Ifo Business Climate rebounded in March, rising to 99.6 points. This marked a 3-month high. There are no U.S. releases to kick off the week. On Tuesday, Germany releases consumer confidence and the U.S. publishes building permits and CB consumer confidence.
German business confidence rebounded in March by more than expected, boosting the euro on Monday. The markets have been accustomed to releases above the 100-level, and the February reading of 98.5 was the weakest since November 2014. The survey noted that any improvement was confined to domestic sectors, such as construction and retail services. The manufacturing sector remains weak, battered down by the ongoing global trade war, which has dampened the appetite for German exports, such as vehicles and auto parts. Germany’s economy slowed down in the fourth quarter, and this bodes poorly for the rest of the eurozone.
There is continuing uncertainty over the U.S-China trade talks. There have been growing expectations that the sides will reach an agreement, with a summit between President Trump and Chinese President Xi to follow. However, President Trump announced a tougher negotiating position last week, saying that the U.S. would maintain tariffs on China until it was clear that China was complying with a deal. Chinese officials are likely to insist that tariffs be removed as soon as a deal is signed, so a deadlock could be in the offing. Trump’s hard-line stance could hamper negotiations, and nervous investors could respond by flocking to safe-haven gold. The trade talks have taken a break, but are expected to resume later this week.
