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USDCHF
Swiss Franc will strengthen against the U.S. Dollar following the country’s removal from the EU’s tax haven list. The European Union update its list of countries which are being used by corporations and wealthy individuals to lower their tax bills. It removed Switzerland and United Arab Emirates, making these countries an ideal investment alternative to EU investors. This will benefit the Swiss economy who previously experienced scrutiny from the EU leaders after it rejected signing the framework deal. The deal was supposed to incorporate the two (2) economies existing bilateral trade agreements. A lesser restriction to doing business with Switzerland might trigger the shift for EU investors who were looking for a stable economy. The Swiss Franc, the U.S. Dollar and the Japanese Yen are deemed as stable currencies. The deal between Switzerland and China can outshine the Dollar and the Yen.
GBPUSD
UK ambassador Kim Darroch resigned from his post following leaked diplomatic cables that strained the relationship between the two (2) allies. The sensitive diplomatic cables showed Darroch’s candid assessments of the political situation in the U.S. and his impression of the Trump administration. At various points, he called President Trump “clumsy and inept,” described him as “radiating insecurity,” and referred to the administration’s Iran policy as “coherent” and “chaotic.” At one point he wrote bluntly “I don’t think this administration will ever look competent.” His resignation gave political analysts and investors relief of further damage between the U.S.-UK relationship. The United Kingdom is looking for a bilateral trade agreement with America once it officially withdraws from the bloc. If the deal will proceed, it will be Britain’s largest trading deal with its largest trading partner in a post-Brexit UK.
EURUSD
The Euro is under pressure from the latest tirade by U.S. President Donald Trump. The United States is set to impose tariffs on $7.5 billion of EU exports. This was after the illegal subsidies given by the European Union to Airbus. Boeing’s 737 Max crash was on every news outlet and the EU uses this to advance its cause. U.S. trade officials said the tariffs would be a set 10% rate on aircraft and 25% on agricultural goods including cheese and wine. Brussels, on the other hand, threatened to retaliate. Investors are worried that these could lead to a full-blown trade war between the allies. Despite this, Germany and France are looking beyond its traditional alliance with the United States. Germany increased its cooperation with China, while France is setting up the bloc’s future relationship with Russia. The Germano-Franco alliance is also moving away from the U.S.-led NATO alliance to build its own military army.
EURJPY
The EU-Japan partnership is challenging China’s Belt and Road Initiative. The two (2) economies are currently dominating trading agreements across the globe. The EU-Japan free trade agreement created the largest trading zone in the world. Aside from this, Japan had also ratified the pacific rim trade pact, the CPTPP (Comprehensive and Progressive Trans-Pacific Partnership). But its most important bilateral trade agreement to date was with the United States. Japan is also a member of the ASEAN Plus 6. The European Union, on the other hand, was able to agree on a draft deal with the Mercosur headed by Brazil. The negotiations between the two (2) bloc took almost 20 years. As economies falls into recession, Japan is showing some strength. Japan’s foreign bonds buying increased to ¥1 billion from ¥400 million. The use on the Japanese Yen for the purchase of these bonds is expected to increase the demand for the currency.
