Italian election results and Trump’s trade wars dominate market`s mood on Monday

Both Italian election results and Trump decision to impose higher tariffs on steel and aluminium are impacting the markets on EUR and USD currency pairs on Monday.

Global equities were mixed in cautious trade, as investor nerves remained on show.

The EUR/USD is trading around $1.2300, slightly lower on the day. The Italian elections resulted in big gains for populist parties and the composition of the next government is unclear. The euro septic Lega will probably be in government and this slightly weighs on the euro. Five Star, led by 31-year-old Luigi Di Maio, was one of the big winners and appeared on course to be Italy’s strongest single party with 32 per cent of the vote. Although it cannot form a government unless it strikes an alliance with other parties, it has positioned itself as a dominant force in Italian politics.

The euro was up 0.1% at $1.2331, erasing all of its losses after sliding to a session low of $1.2155. Against the yen, it was unchanged at 130.25, recovering after hitting an intraday low of 129.36, its lowest level since late August.

However, Germany will finally have a government and Trump’s tariffs weigh on the US Dollar against the majors. U.S. stocks logged hefty losses last week, with the Dow dropping around 3%. Trump is expected to finalize the tariffs – 25% on steel and 10% on aluminum – later in the week, posing a tough challenge for U.S. Trade Representative.

The USD/JPY is trading a bit lower, around ¥105.50, stuck above the lows of ¥105.25 recorded last week.

Sources: 

https://www.investing.com/news/economy-news/top-5-things-to-know-in-the-market-on-monday-1324224

https://www.investing.com/news/stock-market-news/sp-dow-futures-lower-as-trade-war-fears-dominate-1324454

https://www.investing.com/news/

https://www.ft.com/content/e6a89252-1ffa-11e8-a895-1ba1f72c2c11

https://www.fxstreet.com/analysis/eur-usd-forecast-ignoring-italy-trumping-on-looking-for-a-new-direction-201803050927?utm_source=NLsession&utm_medium=email&utm_content=hot-story-headline&utm_campaign=america-newsletter

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