Business

Euro Rises to Two-Month High Amid Tariff Delay and Ukraine Peace Talks

Published

1 year ago

February 17, 2025

RTX

The euro surged to its highest level in nearly two months on Monday, bolstered by US President Donald Trump’s decision to postpone reciprocal tariffs and his push for peace talks in Ukraine. However, analysts caution that the common currency’s rebound may be short-lived amid lingering economic and geopolitical uncertainties.

Euro Gains as Inflation Concerns Ease

The EUR/USD pair climbed to nearly 1.05 in the early Asian trading session, reaching levels last seen on December 18 and briefly touched again in late January. The euro’s rally is largely attributed to Trump’s unexpected tariff delay and renewed optimism surrounding a potential ceasefire in Ukraine.

Market sentiment improved last week after Trump announced a delay in his proposed reciprocal tariffs, a move that eased concerns over inflationary pressures. While the US president has frequently used tariff threats as a negotiation tool, he has so far only implemented a 10% levy on Chinese goods, leaving markets hopeful that further duties might be scaled back or scrapped.

Adding to the optimism, crude oil prices dropped sharply following Trump’s phone conversation with Russian President Vladimir Putin. The discussion, which Trump described as “lengthy and highly productive”, fueled speculation that negotiations might include easing restrictions on Russian oil exports. If that were to happen, inflationary pressures could subside further, strengthening the euro while weakening the US dollar.

The improved outlook for European markets has led traders to favor the euro and British pound, according to Michael McCarthy, Chief Commercial Officer at Moomoo Australia. “Markets are seeing this as a ‘double win’ trade—peace prospects in Ukraine are boosting sentiment toward the European economy, while waning post-election optimism in the US is pulling the dollar down,” he said.

Concerns Over Sustainability of Euro’s Rally

Despite the temporary boost, market analysts warn that the euro’s gains could be short-lived as both Trump’s tariff policy and Ukraine peace negotiations remain highly uncertain.

Just days after announcing the tariff delay, Trump revealed plans to introduce new levies on automobiles starting April 2, targeting key US trading partners—particularly the European Union. The sweeping reciprocal tariffs remain under review by the US Commerce Department, with a final decision expected by April 1. Should these tariffs be implemented aggressively, they could undermine confidence in the euro and push the currency lower once again.

Similarly, while talks of a Ukraine peace deal have sparked optimism, the complexity of ceasefire negotiations means a resolution could take months, if not longer. A key meeting in Paris on Monday, hosted by French President Emmanuel Macron, will see EU leaders—including German Chancellor Olaf Scholz and Italian Prime Minister Giorgia Meloni—discuss a joint military defense spending package. UK Prime Minister Keir Starmer is also expected to participate, aiming to strengthen European defense capabilities in post-war Ukraine.

However, Trump has insisted that the EU take greater responsibility for its own security, which could pressure European governments to increase military spending—potentially leading to higher debt levels that could weigh on the euro.

Upcoming German Elections Add to Uncertainty

Another looming factor that could impact the euro is Germany’s snap elections, set to take place in less than a week. Political uncertainty in Europe’s largest economy has historically pressured the euro, and a volatile election outcome could further weaken investor confidence in the currency.

Despite the euro’s current strength, some analysts remain bullish on the US dollar, pointing to America’s strong economic performance compared to Europe’s fragile recovery.

“My stance remains bullish USD,” wrote Michael Brown, a senior research strategist at Pepperstone in London, in a client note. “Ongoing US economic outperformance should see both the dollar and US stocks continue to climb, albeit in a volatile manner,” he added.

With tariff decisions pending, geopolitical tensions still unresolved, and European economic challenges persisting, the euro’s rally may struggle to hold in the coming weeks.

Business

FII Summit in Rome Calls for Faster Reforms to Boost Europe’s Investment Appeal

Published

8 minutes ago

June 19, 2026

Web Reporter

The discussions highlighted what participants described as a critical opportunity for Europe to reinforce its strategic autonomy and position itself as a leading destination for global investment. However, speakers warned that without faster reforms and reduced administrative barriers, the region risks falling behind the United States and rapidly advancing Asian economies.

Unlike the recent G7 discussions, which focused heavily on geopolitical tensions and security issues, the Rome summit placed economic transformation at the centre of attention. The FII Priority Europe event brought together policymakers and investors to examine how the continent can regain momentum and secure funding for industrial and technological development.

Richard Attias, chairman of the executive committee of the FII Institute, told delegates that Europe retains strong fundamentals, including skilled labour, innovation capacity and established industrial infrastructure. However, he said investors increasingly demand predictability, speed and clarity in decision-making processes.

Attias called for streamlined regulations and simplified administrative systems to improve capital flows into key sectors such as artificial intelligence, digital infrastructure, renewable energy and advanced manufacturing. He also noted that Europe is competing not only with the United States but also with emerging economies that are rapidly adjusting their regulatory frameworks to attract investment.

He stressed that the challenge lies in maintaining European standards while ensuring that regulatory systems do not slow economic progress. According to him, global capital is moving quickly, and Europe must adapt if it wants to remain a leading investment destination.

The issue of long-term investment in Europe was also addressed by Yasir O. Al Rumayyan, governor of Saudi Arabia’s Public Investment Fund and chairman of energy giant Aramco. He said Europe stands at a defining moment in shaping its role in the evolving global economy and emphasized the importance of creating conditions that support large-scale, long-term investment.

Al Rumayyan pointed to opportunities in areas such as energy transition projects, technological innovation and strategic infrastructure development. His remarks carried significant weight, given that the Public Investment Fund manages assets worth about $1.15 trillion, while Aramco remains one of the world’s most profitable energy companies.

Organisers said the choice of Rome as the summit venue reflected Europe’s potential to combine historical influence with forward-looking reform ambitions. The message repeated throughout the event was that while Europe continues to attract strong investor interest, its ability to convert that interest into sustained economic growth will depend on how quickly it modernizes its regulatory environment and accelerates structural reforms.

Business

Oil Prices Slide as US–Iran Accord Eases Supply Fears While Markets React to Fed Policy Shift

Published

19 hours ago

June 18, 2026

Web Reporter

Global crude prices extended losses on Thursday after the United States and Iran signed a memorandum of understanding aimed at ending their conflict and reopening the Strait of Hormuz, a key route for global energy shipments. Equity markets also responded unevenly as investors digested the Federal Reserve’s latest policy signals.

Oil benchmarks dropped in early trading following confirmation that US President Donald Trump and Iranian President Masoud Pezeshkian had signed an initial agreement designed to halt hostilities and restore normal maritime flows through the Strait of Hormuz. The waterway handles a significant share of global crude exports, and expectations of its reopening immediately weighed on prices.

At the time of writing, West Texas Intermediate fell 2.3% to around $75 a barrel, while Brent crude slipped about 2% to $78 a barrel. Although both benchmarks remain above pre-conflict levels near $70, they have retreated sharply from recent highs above $100 recorded during the height of the tensions.

The agreement sets a 60-day period for negotiations on a final settlement addressing Iran’s nuclear programme. In the interim, Tehran has agreed to reduce its stockpile of highly enriched uranium. The deal also includes provisions for easing sanctions, allowing Iran to resume oil exports and enabling tanker traffic to move more freely through the Persian Gulf.

US officials have indicated that the Strait of Hormuz could be fully reopened by Friday without transit fees, a development that has reinforced expectations of increased global supply. President Trump, commenting after the signing, said “oil down, stocks up,” reflecting market reactions to the accord.

Despite the easing outlook, the International Energy Agency has warned that global oil markets remain fragile. Strategic reserves in advanced economies have fallen to their lowest levels since 1990, with OECD stockpiles declining by more than 160 million barrels since the conflict began. The agency also revised down its demand forecast, citing weaker consumption and elevated fuel prices.

Flows through the Strait of Hormuz had already begun recovering before the agreement, reaching roughly 12 million barrels per day in early June after a period of disruption.

Financial markets, meanwhile, delivered a mixed performance following the Federal Reserve’s latest projections. Wall Street fell on Wednesday, with the S&P 500 down 1.2%, the Dow Jones off 1%, and the Nasdaq losing 1.3%, after policymakers signalled the possibility of interest rate increases later this year.

In his first press conference as Fed chair, Kevin Warsh avoided committing to a clear policy path, signalling a shift in how the central bank communicates future decisions. US President Donald Trump, attending the G7 summit in France, described the situation as “whatever,” while acknowledging uncertainty over potential rate hikes.

Early trading on Thursday pointed to a rebound, with US futures higher and Asian equities advancing on optimism over easing geopolitical risks. European markets opened more cautiously, reflecting lingering uncertainty despite the improving energy outlook.

Business

Kevin Warsh Begins Fed Tenure as Markets Watch for Clues on Future Rate Path

Published

2 days ago

June 17, 2026

Web Reporter

The US Federal Reserve enters a new phase on Wednesday as Kevin Warsh presides over his first policy meeting as chair, marking a closely watched leadership transition in American monetary policy. While economists broadly expect interest rates to remain unchanged, investors are focused on signals that could define the central bank’s direction under new leadership.

The Federal Open Market Committee is expected to keep the benchmark interest rate within the 3.50% to 3.75% range, extending a steady policy stance for a fourth consecutive meeting. The last adjustment came in December 2025, when rates were reduced by 25 basis points.

Although no immediate policy shift is anticipated, attention is centred on the language of the Fed’s statement and Chair Warsh’s first press conference. Analysts say even subtle changes in wording could indicate whether policymakers are leaning toward holding rates higher for longer or considering future increases if inflation remains persistent.

Warsh assumes leadership during a more complex economic environment than when he was previously associated with calls for lower interest rates. At that time, he aligned with arguments suggesting artificial intelligence-driven productivity gains could help ease inflation pressures. However, economists now point to continued inflationary risks tied to investment cycles in technology sectors, which have contributed to demand pressures across the economy.

Inflation has risen since the outbreak of the Iran conflict in February, reaching 4.2%, its highest level in three years, largely driven by higher energy costs. Although a US-backed framework for a peace deal has been announced, uncertainty remains over its durability, and analysts warn that any relief in fuel prices could take months to filter through to broader inflation measures.

The Fed’s preferred inflation gauge has remained above its 2% target for more than five years. At the same time, the labour market continues to show resilience, with 172,000 jobs added in May, marking the third consecutive month of solid employment growth. This stability has reduced pressure for further rate cuts that were previously projected earlier in the year.

Because interest rates are expected to remain unchanged, market attention has shifted to the Fed’s updated Summary of Economic Projections and the “dot plot”, which outlines policymakers’ expectations for future rate movements. Some economists, including those at Bank of America, anticipate that the projections may indicate no rate cuts through 2026, with a minority of officials even signalling potential rate increases.

Communication strategy is also expected to be a key focus under Warsh. He has previously argued that the Fed should reduce the frequency of public commentary to avoid constraining policy flexibility. One possible change could involve returning to fewer press conferences, a model last used under former Chair Ben Bernanke.

However, analysts caution that reduced communication could unsettle financial markets that have grown reliant on clear forward guidance from the central bank.

Adding to the complexity, former chair Jerome Powell remains on the Fed’s board as a governor and is expected to participate in Wednesday’s vote, maintaining influence over policy decisions during the transition period.