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EU Aircraft Dispute Verdict Is In


The World Trade Organization ruled in favor of the United States in regard to the dispute on aircraft subsidies from the EU. At the heart of the dispute is the complaint from Washington about Airbus SE (a European aircraft manufacturer) receiving government subsidies. President Trump vowed to hit back at the EU with tariffs in response. The WTO ruling is the largest in history and allows the US to impose tariffs worth $7.5 billion on EU products which includes aircraft parts, leather goods, wines, and spirits.

Euro Gains for a Second Day on USD Weakness

The euro currency maintained the bullish momentum in the backdrop of a weaker US dollar. Lack of economic data from the Eurozone saw investors focusing on US data instead. The ADP private payrolls report saw hiring rise just 135,000 in September. This was below the estimate of 140,000. The numbers for August were revised down to 157,000 from 195,000 originally.

Further Gains in EURUSD Unlikely for Now

The currency pair has managed to post a strong reversal after slipping to a fresh two-year low. But further gains are unlikely to come by as the currency pair tests the resistance level from below. Only a convincing rally above the trend line and the horizontal support/resistance area will confirm the bullish bias. In the near term, we expect EURUSD to remain confined to the current range.

UK Submits Final Brexit Proposal to EU

UK Prime Minister submitted a newly drafted proposal to his EU counterparts. The new deal is seen to be going soft on the Irish backstop. The British PM maintained that if a deal was not reached, the UK will leave the EU. However, this could get complicated as lawmakers can legally block a no-deal Brexit.

GBPUSD Stays Flat for Now

The cable remained muted to Brexit developments on Wednesday. Price is currently trading near the recently breached support level of 1.2291. Any further gains could see GBPUSD trading within the range of 1.2291–1.2370. However, the risks to the downside remain. The lower support at 1.2228 will be the downside target for the short term.

Gold Ticks Up as Risk Sentiment Drops

The precious metal continued its upswing as investor risk sentiment fell. Weak manufacturing reports and the latest WTO ruling heightens uncertainty for the global economy. Equity markets responded with their continuing declines for a second day. It was the worst decline in more than five weeks.

Can XAUUSD Maintain the Current Gains?

The bullish reversal in gold comes right after prices fell below the price level of 1485. Further gains are required as XAUUSD trades in the support/resistance area between 1485 and 1508. Unless gold prices close with clear gains above 1508, the current retracement could fizzle. This Friday’s payrolls report could be the catalyst.

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Source: https://www.orbex.com/blog/en/2019/10/eu-aircraft-dispute-verdict-is-in
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