The dollar dipped Monday morning against the euro and the pound as Washington indicated it will curb Chinese investments. The euro and pound are facing their own pressures off of political concerns.
Stepping up the trade war
With the July 6 due date for tariffs a little more than a week away, the Trump administration has indicated that its prepared to keep up the trade-war tensions with China.
The Treasury Department plans to increase the scrutiny around Chinese investments in U.S. industries, citing security risks. Specifically, investment in new-energy vehicles, robotic, and aerospace would be a threat to economic and national security.
Meanwhile, China announced that it would make it easier for banks to lend money to Chinese companies starting on July 5.
Euro reaching new highs
The euro is reaching new levels not seen since June 14. The EUR/USD pair is trading up against 1.17, despite poor data out of Germany and increased pressure on Chancellor Angela Merkel to change her country’s immigration policy.
The IFO current assessment of German business conditions and expectations came in lower than expected at 105.1 compared to estimates of 105.6.
The European summit coming up on June 28 in Brussels will address a series of issues for the region, but one of the more prominent is Germany’s immigration policy, which came under fire by members of Merkel’s coalition who demanded a more strict fix by the end of the month.
Merkel held a mini E.U. summit of sorts over the weekend to try to come up with a solution, but failed to identify one.
Among migration, the other issues for the E.U. summit include budgeting and the Italian government.
Brexit on the backburner
While Brexit is a top priority for the United Kingdom, it is last on the list of topics to tackle during the E.U. summit later this week.
Most recently, Prime Minister Theresa May is being urged by U.K. businesses to make progress in Brexit negotiations with the E.U. or risk losing investment in the country.
GBP/USD is trading up around 1.327 this morning despite the Brexit uncertainty.