US-Europe equities convergence trade is in full swing [Video]

Ipek Ozkardeskaya Swissquote Bank Ltd

Another week starts with tariff threats. This time, everyone that applies tariffs to the US will be hit back with the same tariffs, and all aluminium and steel imports to the US – no matter from whom – will face a 25% tariff. Mood this Monday in Asia is pretty mixed – to say the least. Aluminum and iron ore futures are slightly down, the US dollar index is up and the commodity currencies like Aussie and Loonie opened the week with a gap but the AUDUSD recovered early losses. The swift recovery in Aussie was certainly due to the encouraging Chinese data that showed that inflation advanced to the highest level in five months thanks to increased spending during the Chinese New Year holiday.

Elsewhere, Friday’s jobs data from the US was all but ideal for the so-called goldilocks scenario. Plus, the latest data from the Fed on Friday showed alarming rise in household debt, credit card delinquencies remain strong. As such, it’s hard to guess what’s the best thing to do for the Federal Reserve (Fed). All eyes will be on Fed Chair Jerome Powell’s semi-annual testimony on Tuesday and Wednesday and on US inflation update due Wednesday.

The EURUSD weakened on Friday and again in Asia on tariff threats while the convergence trade between US and European equities remains in play.

Author

Ipek Ozkardeskaya

Swissquote Bank Ltd

Ipek Ozkardeskaya began her financial career in 2010 in the structured products desk of the Swiss Banque Cantonale Vaudoise. She worked in HSBC Private Bank in Geneva in relation to high and ultra-high-net-worth clients.

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