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The Brazilian Real is expected to plunge in today’s trading following reports that Brazil exports were down in October. Data showed that Brazil’s foreign sales slid by 20.40% to $18.23 billion on a year-over-year (YoY) basis. In line with this, the country’s trade surplus narrowed by 80%. This was amid the possibility of the United States and China finalizing a trade deal this November. Aside from this, investors are pessimistic about the EU-Mercosur trade deal. The 20-year long negotiation between the European Union and the Mercosur bloc ended with the election of Brazil President Jair Bolsonaro. Following his election was Brazil assuming the leadership in the Mercosur bloc and banning Venezuela’s participation. However, the burning of the Amazon rainforest could be the beginning of an end to the EU-Mercosur trade deal. As the European Union turns greener, Germany and France slammed Brazil’s negligence in Amazon.
The U.S. Non-Farm Payrolls report’s results were in line with analysts’ estimates. This is expected to trigger a rally in the U.S. Dollar. Figures showed that the U.S. unemployment rate were at 3.6%, down by 0.1% from the previous month. Under the leadership of U.S. President Donald Trump, the U.S. employment rate drops to record low. The 3.5% unemployment in September was the lowest in the entire U.S. history. Analysts further predicted that this will continue in the coming months as the “America First” policy by Trump continues to realize. Also, its ISM (Institute of Supply Management) Manufacturing Purchasing Managers Index (PMI) broke the 7-month drop in the index. The Brazilian Real, on the other hand, continues to plunge amid a disappointing year-over-year (YoY) report. Figures showed that Brazil exports for the month of October dropped by 20.4% to $18.23 billion.
The United States and China’s rivalry is playing out in Romania. Both the economic and nuclear-armed countries want other nations to take on their sides. Romania currently host U.S. military bases and an anti-ballistic missile shield, the THAAD (Terminal High Altitude Area Defense). Aside from that, the country also hosts China’s telecom giant Huawei’s regional hub and a potential investment in Cernavoda. This could become the most important nuclear power plants in the CEE (Central and Eastern Europe). All of these will help the Romanian economy, having both the U.S. Dollar and the Chinese Yuan as its currency reserves. The United States currently account for 1.8% or $1.5 billion of the country’s exports. But as more U.S. military bases are being built in the country, figures are still expected to go higher. China, on the other hand, is trying to penetrate the European market through the eastern bloc.
Norway’s 1 trillion sovereign wealth fund is moving away from Europe. The SWF currently owns 1.8% of the global shares, making it a key investor to corporations and governments. The announcement by Norway came amid the economic slowdown in Europe, particularly with EU-member states. Germany, the bloc’s economic powerhouse, is also the verge of recession. The sovereign wealth fund is planning to diversify its investments in Asian and the Americas. This is expected to further hurt the ailing single currency. Meanwhile, as its investment returns increased, the Norwegian Krone is expected to strengthen against the Euro. Norway was recently at odds with the European Union after its “soft Brexit” advice to the UK. Under this approach, Britain will leave the bloc “only by name” but will continue doing trades with the largest trading bloc under the EFTA (European Free Trade Agreement).