The Dollar is stronger across the board today thanks in part to the thawing of trade relations between the US and China. The Chinese Finance Ministry announced today that it would cut tariffs on car imports from the US from 40% to 15% for 3 months, starting on 1stJanuary. This will bring them in line with tariffs on car imports from other countries. China also said it would suspend its additional 5% tariff on imports from the US of 67 other auto parts.
The Dollar, which had effectively been range-bound, has rallied to its strongest level since end-January 2017 helped in part by weakness in both Sterling and the Euro. Sterling, which had appreciated almost 1% following the failed no-confidence vote against Prime Minister May, is down about 0.3% following today’s European Council meeting at which the EU confirmed that it would not re-open negotiations on the draft Brexit deal. Meanwhile the Euro inched to an 8-session low, weighed down by data pointing to weak Eurozone growth just as the ECB is about to end its quantitative easing program.
The French Composite PMI collapsed to 49.3 in December from 54.2 in November, partly as a result of the recent violent protests, with a number under 50 indicating a contraction in economic activity. This contributed to a fall in the Eurozone Composite PMI from 52.7 to 51.3 – the lowest level for the index since 2014.
