EUR/USD is almost unchanged in the Friday session. Currently, the pair is trading just below the 1.07 level. On the release front, there are no major Eurozone releases. The US will release Advance GDP, with the estimate standing at 2.1 percent. We’ll also get a look at durable goods orders and UoM Consumer Sentiment.
There was positive news out of Germany, as consumer confidence continues to rise. The GfK Consumer Climate report rose to 10.2 points in December, climbing for a third consecutive month. Still, the Eurozone consumer is not as optimistic, as Eurozone Consumer Confidence, released earlier this week, was unchanged at -5 points. The Eurozone is showing some improvement, as manufacturing and inflation numbers continue to point upwards. On Thursday, an IMF report found that economic growth in the Eurozone was improving and projected growth of 1.6 percent in 2017 and 2018. However, the report also warned that political instability could on the Eurozone economy, with Britain’s departure from the EU and elections in several Eurozone countries where many voters are skeptical about European integration.
The Trump era is barely a week old, but there are already signs of the economic approach the administration appears to be taking. Trump declared in his inauguration address that he would put “America first”, and he has followed up with some protectionist measures. Trump formally withdrew the United States from the Trans-Pacific Partnership, a broad trade agreement that would have covered some 40 percent of gobal GDP. After announcing he would renegotiate the NAFTA agreement with Canada and Mexico, Trump took aim at his southern neighbor and announced that he would build a wall between the US and Mexico. Predictably, Mexico has reacted angrily to this move, and a scheduled meeting between Trump and Mexican President Enrique Peña Nieto has been cancelled. In the latest salvo in the growing crisis, the White House White House suggested imposing a 20 percent tax on Mexican imports to pay for construction of the wall. Trump’s unconventional and disjointed approach to international trade could have major ramifications on global trade and could lead to financial instability in global markets.