Euro banknotes on display
Euro strengthened on Monday after the United States and the European Union finalized a trade agreement, marking a significant step in averting a broader global trade conflict.
On Sunday, during a meeting in Scotland, U.S. President Donald Trump and European Commission President Ursula von der Leyen unveiled a deal imposing a 15% tariff on EU goods, a sharp reduction from the 30% tariff Trump had previously threatened to implement starting August 1.
Concurrently, U.S. and Chinese negotiators are set to meet in Stockholm on Monday to discuss extending a trade truce, aiming to avoid steep tariff increases before the August 12 deadline.
“The trade clarity emerging from these agreements could foster a more optimistic outlook for global markets,” said Rodrigo Catril, senior currency strategist at National Australia Bank, on a recent NAB podcast. “With the rules now clearer, we may see increased global interest in investments and expansion opportunities.”
The euro rose 0.2% to $1.1763 in Asian trading and gained 0.2% against the yen, reaching 173.78 yen. Trump noted that the EU committed to $600 billion in U.S. investments, alongside boosting purchases of American energy and military equipment. This deal echoes a recent agreement with Japan, which includes $550 billion in U.S. investments and a 15% tariff on Japanese cars and other imports.
While the 15% tariff is lower than feared, some European stakeholders view it as high compared to earlier hopes for a zero-tariff arrangement. In parallel, China faces an August 12 deadline to secure a lasting trade agreement with the U.S. Analysts anticipate no major breakthroughs in Stockholm but consider a 90-day extension of the mid-May trade truce likely.
On Friday, the U.S. dollar gained strength, supported by robust economic data suggesting the Federal Reserve may delay resuming interest rate cuts. This week, both the Fed and the Bank of Japan are expected to maintain current rates, with investors closely watching post-meeting statements for hints on future policy moves.
The dollar held steady at 147.68 yen, while the dollar index, measuring the greenback against a basket of major currencies, dipped 0.1% to 97.534. The British pound fell slightly by 0.1% to $1.34385. The Australian dollar rose 0.2% to $0.6576, while the New Zealand kiwi remained unchanged at $0.6019.
