Global macro overview for 05/03/2018

US President Donald Trump has threatened the European Union with import tariffs on European cars if the EU decides to retaliate for the introduction of tariffs on imports of steel and aluminum announced by him."If the E.U. wants to further increase their already massive tariffs and barriers on U.S. companies doing business there, we will simply apply a Tax on their Cars which freely pour into the U.S. They make it impossible for our cars (and more) to sell there. Big trade imbalance!" wrote Trump on his official Twitter account. Trump at the same time accused the European Union of blocking the sales of American cars in Europe. "This is a huge inequality in trade between us" - the president stressed in the next entry on Twitter.

The DPA agency notes that this threat will primarily affect the German automotive industry. In 2017, the sale of German new cars in the US grew by 1.0% up to 1.35 million pieces. The US president announced on Thursday that he will introduce tariffs on imports of steel and aluminum next week; this is to help American companies that - according to the president - have suffered through unfair trade agreements. Steel imports are to be subject to a tax of 25%, and aluminum - 10%. Trump said he chose to impose tariffs because the United States "needs great steel and aluminum producers for defense purposes."

Trump's decision was immediately reacted by the European Union, which is considering introducing retaliation tariffs on American steel and a number of other products, including agricultural products: "We will not sit idly while our industry is being hit, which threatens thousands of European jobs," said European Commission President Jean-Claude Juncker. "We will impose duties on Harley-Davidson motorcycles, bourbon and Levi's jeans," warned Juncker and was backed-up by French Minister of Economy and Finance Bruno Le Maire who announced "a strong, coordinated and united EU response".

Let's now take a look at the USD/JPY technical picture at the H4 time frame. After a failure to rally above the key technical resistance zone at the level of 107.91 - 108.43 the market dropped towards the new local low at the level of 105.25 and currently stays around this level. The nearest technical resistance is seen at the level of 10641, but the key technical zone remains higher. The momentum indicator remains below its fifty level, so more downside pressure is being anticipated.

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