The US-China conflict remains under the spotlight. Moreover, Washington decided to expand a trade war and announced the imposition of 5% tariffs on exports from Mexico. Thus, tariffs were introduced in early May and at the end of May. Donald Trump threatened that the customs duties will continue rising as long as the illegal immigration issue remains unsettled. It seems that July will also start with introduction of trade restrictions. Tomorrow China is due to slap new tariffs on goods from the United States. Markets doubt that the tensions have eased and the US-China trade deal can be reached soon. The risk aversion is high today. Consequently, the demand for safe-haven assets has increased. Gold futures with delivery in June were trading near the important physiological level of 1,298 dollars per ounce. The Swiss franc has also gained ground, but the best-performing currency was the Japanese yen. As for the US dollar, it has held steady as traders preferred to buy safer assets. Besides, the demand for Treasuries was also high while the yield was low. At the same time, the American currency maintained the bullish bias against the euro. However, on Friday the EUR/USD pair reversed to the upside and approached the level of 1.1150. Still, the reversal is unlikely to be sustained as the European economy is weak and the budget conflict in Italy is unlikely to be resolved
soon. Besides, traders are worried that the US foreign trade policy may affect the union in the light of the newly imposed tariffs on Mexico. The next target for the euro lies at 1.10. By the way, the Mexican peso has already plunged
by 2.5%. Meanwhile, the continuous slide of the British pound seems to be endless. Sellers managed to break below the level of 1.26. By the middle of the European session the pair was hovering near the level of 1.2586. Naturally, the bearish scenario is likely to remain valid. The pound sterling will be able to recover only if the quotes break above 1.2690. On Friday the United Kingdom will not release any important macroeconomic statistics that could influence the pound exchange rate, so traders are focusing on geopolitical events. Next week Donald Trump plans to visit the United Kingdom.