US-EU: Joint Statement Confirms 15% Tariff Ceiling, But Delay On Autos
Aug-21 11:19
The US and EU have released a joint statement intended to give more clarity on the nature of the trade and tariffs deal agreed between US President Donald Trump and European Commission President Ursula von der Leyen in Scotland in July. Full statement from the White House can be found here. EU statement here. EU Q&A on joint statement here. Selected sections from the joint statement posted below:
- The US commits to levy a 15% tariff on most EU imports inc. autos, pharmacuticals, semiconductor chips and lumber.
- The EU intends to eliminate tariffs on all US industrial goods and provide preferential market access for US seafood and agricultural products.
- The US will lower tariffs on autos/auto parts when the EU introduces legislation to enact its own reductions of tariffs on US autos. Senior White House official says to Reuters, this is going to come in "hopefully weeks."
- The US will apply only most-favoured nation tariffs from 1 Sep on EU aicraft and parts, generic pharmacuticals and their ingredients, and unavaliable natural resources (e.g. cork).
- "European Union intends to procure U.S. liquified natural gas, oil, and nuclear energy products with an expected offtake valued at $750 billion through 2028. In addition, the European Union intends to purchase at least $40 billion worth of U.S. AI chips for its computing centers. "
- "European companies are expected to invest an additional $600 billion across strategic sectors in the United States through 2028. "
Earlier today, MNI's Policy team reported on the lack of detail in some areas of the statement, particularly with regards to autos (see 'MNI: EU-US Joint Trade Statement Seen Lacking Key Detail', 21 August). Contact sales@marketnews.com for access.
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FOREX: Bullish Indicators Prevailing for EUR Crosses
Jul-22 11:15
- Similar bullish sentiment is seen in the crosses, with EURJPY and EURNZD recently extending their impressive rallies from the June lows to 6% and 4.5% respectively.
- Trepidation surrounding the Japanese election/fiscal outlook has contributed to the significant EURJPY upswing, and fresh cycle highs last week reinforce current conditions. Sights are on 173.43 (Jul 12 ‘24 high) before a key medium-term resistance level at 175.43, the July 11 ’24 high.
- Lower-than-expected New Zealand CPI on Monday has contributed to NZD underperformance this week, providing a noteworthy tailwind for EURNZD (below), which has risen to a fresh 3-month high above 1.9650 this morning. Moving average studies continue to support the cross well, signalling scope for an extension of the rally towards 1.9755 and 2.0011. Initial support at the 20-day EMA moves up to 1.9458.
- Fresh cycle highs last week maintain the price sequence of higher highs and higher lows for EURGBP, also highlighting a dominant uptrend. A resumption of gains would open key resistance at 0.8738, the 2025 high. Support to watch is 0.8620, the 20-day EMA.
Source: Bloomberg Finance L.P. / MNI
OUTLOOK: Price Signal Summary - Bear Cycle In Gilts Still In Play
Jul-22 11:15
- In the FI space, Bund futures traded higher Monday. The climb resulted in a move through resistance around the 50-day EMA, at 130.22. A clear break of the EMA would undermine the recent bear theme and highlight a possible reversal. This would open 130.76 initially, the Jul 4 high. Clearance of this level would strengthen a bullish theme. A key support and the bear trigger has been defined at 129.08, the Jul 14 low.
- A bear cycle in Gilt futures remains in play and for now, Monday’s strong gains are considered corrective. Recent weakness resulted in a break of support at 91.63, the Jul 2 low. Price has also traded through 91.50, the 61.8% retracement of the May 22 - Jul 1 bull leg. The move down exposes 90.97, the 76.4% retracement point. Clearance of this level would strengthen a bearish theme. Initial firm resistance is at 91.97, the 20-day EMA.
FOREX: Single Currency Optimism Remains as ECB Approaches
Jul-22 11:12
- Largely reflective of the broad greenback weakness on Monday owing to the trans-Atlantic tariff tiff, EURUSD edged back above the 1.17 where spot has since been consolidating on Tuesday. Latest developments keep bullish conditions for the pair firmly intact as we approach this Thursday’s Eurozone flash PMIs and ECB decision/press conference.
- The ECB is expected to hold its policy rate at 2.00%, after President Lagarde emphasised that policy was in a "good place" at the June decision. Economic data since June has generally confirmed the ECB's outlook, but tariff uncertainty has once again ratcheted higher after President Trump's latest threat of a 30% reciprocal rate from August 1.
- EURUSD trend indicators continue to highlight a dominant uptrend, supportive of the numerous sell-side forecasts predicting a move to 1.20 and above over the second half of 2025. A stronger resumption of gains from here would renew the focus on 1.1829, the Jul 1 high and the bull trigger.
- Support to watch lies at the 50day EMA, an average the pair has not closed below since late February. It currently intersects at 1.1525, and a clear break would be required to signal a stronger reversal.
