CAC Slides to 8-Week Low as Trump Thumps China

The CAC index continues to point downwards in the Tuesday session. Currently, the CAC is at 5378, down 1.33% on the day. On the release front, the ECB Forum kicks off with a speech from ECB President Mario Draghi. In the eurozone, the current account surplus narrowed for a third straight month, dropping to EUR 28.4 billion. This fell short of the estimate of EUR 30.3 billion. On Wednesday, Mario Draghi and Fed Chair Jerome Powell will participate in a panel at the European Forum.

Investors continue to monitor the brewing trade war, as trade relations between the United States and China continue to deteriorate. Investor risk appetite has softened significantly, and the CAC has declined 2.0% this week. Earlier on Tuesday, the CAC dropped to its lowest level since mid-April. The latest round of the tariff spat between the world’s two largest economies started when the U.S announced a 25 percent tariff on $50 billion in Chinese goods on Friday. After China responded with an identical move on U.S. imports, President Trump has now threatened to impose 10 percent tariffs on some $200 billion in Chinese goods. Not surprisingly, China has threatened to retaliate against this latest move. Trump has vowed to take action on the $375 billion trade deficit that the U.S has with China, claiming that the latter is guilty of unfair trade practices. With the first of the U.S tariffs scheduled to take effect on July 6 and no signs that any side will blink first, global equity markets could be headed for significant headwinds.

  Risk off moves supported by tit-for-tat trade dispute

  Investors’ Concerned By Prospect of More Tariffs

Economic Calendar

Tuesday (June 19)

  • 4:00 ECB President Mario Draghi Speaks
  • 4:00 Eurozone Current Account. Estimate 30.3B

Wednesday (June 20)

  • 2:00 German PPI. Estimate 0.4%
  • 9:30 ECB President Draghi Speaks
  • 9:30 Fed Chair Powell Speaks

*All release times are DST

*Key events are in bold

CAC, Tuesday, June 19 at 8:00 EDT

 Open: 5387 High: 5397 Low: 5371 Close: 5376

This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.

Kenny Fisher

Kenny Fisher

Currency Analyst at Market Pulse
Kenny Fisher joined OANDA in 2012 as a Currency Analyst. Kenny writes a daily column about current economic and political developments affecting the major currency pairs, with a focus on fundamental analysis. Kenny began his career in forex at Bendix Foreign Exchange in Toronto, where he worked as a Corporate Account Manager for over seven years.
Kenny Fisher

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