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The U.S. Dollar was under pressure amid increasing calls to ratify the USMCA (United States-Mexico-Canada). This was amid the escalating trade war between the United States and China. The trade war left millions of agricultural workers suffering from lower prices due to high supply and low demand. China banned importing from the U.S. to favor Brazil exports. Brazil now accounts for 80% to total Chinese soybean imports. However, the U.S. Congress was having hard time passing the bill following the win of Democrats during the midterm elections. Canada, on the other hand, found relief from the delayed tariffs. This helps the Canadian Dollar recover after China banned Canadian exports. Canada’s relationship with the Kingdom of Saudi Arabia also enter to new lows. Since the election of President Trump, he waged a trade war against rivals and allies, including its neighbors Canada and Mexico.
The United States has been dragging Australia from its war. First, America requested members of the Five Eyes Intelligence Alliance to ban Chinese telecom giant Huawei. Among the other members, only Australia was left. Second, it requested Australia’s participation in the U.S.-led coalition in Iran. This was following the blocking of Iran on the Strait of Hormuz. The strait facilitates 33% of global oil supply. Now, the U.S. want Australia to back the country with its trade war with China. Australia was greatly affected from the trade war between the two (2) largest economies in the world. The Reserve Bank of Australia (RBA) cut rates twice this year amid the escalating trade war. The country also enters recession for the first time in 27 years. The central bank further reiterate that it was ready to enter into negative rates to weigh down global political and economic uncertainty.
The European Parliament President David Sassoli met with British Parliament Speaker Boris Johnson just a week before the EU Summit. He was seeking to extend the Brexit to avoid Britain from crashing out of the European Union without a deal. This was amid the hard Brexit stance of British PM Boris Johnson. Johnson reiterated that he plans of taking the United Kingdom out of the EU, with or without a deal. The two (2) officials agreed to intensify talks on Brexit next week. However, analysts see the move by the president as a concession to prevent hurting the already sluggish EU economy. Germany has long fueled the economic growth of the European region with its car manufacturing industry. However, recent comments by Trump suggests that he was thinking of imposing tariffs to the industry to end what he called “an unfair trade practices” by its rival economies.
The Euro will experience short-term weakness as it approached a major resistance line. This was due to increasing calls for the largest trading bloc to sign a trading deal with Australia. Australia was the second country to welcome a post-Brexit trade agreement with the United Kingdom after New Zealand. However, it was not well received by EU leaders leading to the bloc banning some Australian exports. This weakened the country’s economy who is already experiencing slowdown from the escalating U.S.-China trade war. Australia was deeply exposed to both economies with the U.S. being its major military ally. China, on the other hand, was considered by Australia as its largest trading partner. Meanwhile, the European Union placed second to the country’s major trading partners. Netherlands Prime Minister said he is looking forward for the bloc to sign a sustainable and inclusive deal with Australia.
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