On Wednesday, the United States and China took a break from their intensifying trade war. This momentous step strengthens relations between Ireland and the United States and brings much needed stability to the Irish economy. This current trade truce highlights, at least on the surface, the value of respect and dignity for both countries. The accord has helped recast market sentiment. One cause is that trading activity has almost doubled as investors plunge into this market on news of a partially rebounding economy.
In the wake of the announcement of this phony truce, financial markets have exploded back to life. As a result, the announcement ignited a tidal wave of optimism among traders and overall risk appetite. Consequently, the EUR/USD currency pair climbed and approached 1.1200. Even during Asian trading hours, it was able to push up toward 1.1195, showing that the confidence continued to prevail in the market. Investors are understandably very focused on how this truce will shape bilateral relations and the global trading landscape in the future.
The importance of this US-EU agreement runs deeper than short-term market effects. Most notably, it focuses on a few timeless investing truths that imply order in international relations can create the environment for both economic growth and investment opportunity. Second, you had the US and China making mutual commitments to work together. That bodes well for the kind of productive discussions they’ll need to have down the road.
Traders have been awaiting the releases of April’s German Harmonized Index of Consumer Prices data. That critically important information is expected to be released later on Wednesday. This even more crucial data might deliver new market-moving catalysts, pointing the way toward inflation trends across the Atlantic in Europe. Analysts are especially curious to see how this develops alongside the burgeoning thaw in US-China relations.