Investors exit US assets as fears over growth and inflation resurface – Euro currency news daily

In Europe, investors will continue to assess the potential impact on the Eurozone economy from Trump’s tariffs and will be watching for any retaliatory measures. Stephane Sejourne, EU commissioner for prosperity and industrial strategy, said today, that a “list of products in the EU’s response to the Tump administrations tariffs will be published in the next few days” and the EU will stand united knowing that they have “cards up their sleeve to pressure the US”. The single currency rallied over 3% last week.

UK companies are expected to face significant competition in the global market as business owners from nations’ hit with tariffs look for other markets for their products. Such a scenario, would create difficulty for a UK economy that is already struggling to cope with tight financial conditions. The Bank of England is maintaining a strict “gradual and cautious” stance on further monetary policy easing as inflationary pressures remain elevated from the Bank’s 2.0% target rate.

The US Dollar and Equities remain under pressure following an exodus out of US assets last week. However, employment data released on Friday showed the US added 228,000 jobs in March, beating economist’s expectations. Fed Chairman, Jerome Powell, said the US tariffs risk higher inflation and slower growth. The Fed’s obligation is “to ensure that a one-time increase in prices does not become an ongoing inflation problem”..

Key movers
European Investor sentiment index, Sentix, deteriorated in April to a low of -19.5 from a previous print of -2.9 in March. The Euro rallied though as markets look at a healthy EU current account position when weighing the effects of upcoming US tariffs. Counter-measures are expected to be announced as the EU considers $28 billion of US imports on dental floss and diamonds. The Euro is presently sitting at six-month highs vs it’s G7 counterparts.

UK GDP data is due for release, Friday April 11, and could show an improvement after a weak January. The Government is ramping up spending this year and that should keep growth supported, however it is important to note that weaker US and EU demand for UK goods and services could weigh heavily as we move later into this year. Markets will also closely look at industrial production data which is due for release this Friday.

Dark clouds are building above the US economy as the Trump administration’s trade regime raises fears of higher prices and slower growth. In that context, expectations are building that the US Federal Reserve will provide a boost for the US economy by cutting rates. Markets are now pricing in 111 basis points of cuts by the Fed before year end. This Thursday will see the release of consumer Price inflation (CPI) data which is a key measure and will be watched carefully by the Fed for signs of increased price pressures.

Source: EUbusiness