The euro has had a strong start to the week, picking up more than 0.25% on the pound and nearly double that on the dollar. With gold hitting a new record high and the dollar declining, it appears the shifts in the market are driven by the uncertainty created by US President Donald Trump’s visa fee-increasing executive order on Friday. With few major data releases this week, that early lead could be set to extend, unless something in the news stumbles the euro’s pace.
The big news in the UK, was the announcement of a second runway at Gatwick, which Chancellor Rachel Reeves hopes will create economic growth. This second runway is addition to the third runway signed off at Heathrow – though, both infrastructure projects are still years out from the start of construction, let alone operation.
Later this morning, S&P is due to publish the results of its manufacturing and services surveys, revealing whether the UK industries have grown or shrunk in the past month. The last survey’s results showed the sharpest decline in three months.
The price of gold has continued to rise, perhaps driven by the uncertainty caused by President Donald Trump’s latest executive order. On Friday, Trump announced that applicants for the H-1B skilled worker visa would need to pay a $100,000 fee, a move that economists have said will harm US growth.
With overseas skilled labour costing more in the US, it may be Europe and the UK that gains. Friendlier countries may soon call this skilled talent home.
Last week saw the US Federal Reserve announce a long-awaited (and much-demanded) cut to interest rates. The cut came not because of economic certainty, but because of a hollowing out of the US labour market. Today, Fed chair Jerome Powell is due to give a speech that will give clarity on if or when more interest rate cuts can be expected. He may comment on the impact of the new visa fee, too.
The euro’s gains may be better explained by the dollar’s falls, instead of any significantly positive economic news coming out of the EU. However, later this morning HCOB (Hamburg Commercial Bank) will publish its own manufacturing and services surveys.
We are still seeing the impact of Trump’s tariffs on Europe, which secured a particularly poor trade deal with the US, so growth or contractions in Germany could have an immediate impact on the euro.
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