Euro shrugs off Trump threats as capital flows hold firm

Source Cryptopolitan

The Euro stayed firm this week, even after President Donald Trump renewed trade threats against European governments over Greenland.

The pressure looked real, but the reaction stayed calm. The reason is in capital flows, not politics. Europe funds a huge share of U.S. markets.

Europe stands as the largest foreign lender to the United States. Countries across the region hold about $8 trillion in U.S. bonds and equities.

That figure almost doubles the holdings of the rest of the world. George Saravelos, global head of FX research at Deutsche Bank, laid this out in a Sunday client note. The Euro is supported by that balance of money and leverage.

European capital restrains tariff fallout

Saravelos warned that the Western alliance faces real strain. He said, “In an environment where the geoeconomic stability of the Western Alliance is being disrupted existentially, it is not clear why Europeans would be as willing to play this part.”

He added, “Developments over the last few days have potential to further encourage dollar rebalancing.” Those remarks tied market risk to funding, not tariffs. The Euro was sharply selling as investors weighed exposure on both sides of the Atlantic.

Saravelos said new U.S. tariffs over Greenland could push Europe toward tighter political coordination. That dynamic reduced the odds of lasting currency pressure this week.

He also said, “The key thing to watch over the next few days is whether the European Union activates its anti-coercion instrument.” French President Emmanuel Macron plans to request that step, according to a person close to him who spoke under anonymity due to government rules.

Saravelos said, “With the U.S. net international investment position at record negative extremes, the mutual inter-dependence of European-U.S. financial markets has never been higher.”

He added, “It is a weaponization of capital rather than trade flows that would by far be the most disruptive to markets.”

Chinese companies expanded their use of the Euro in cross-border payments last year. Settlements in the currency rose at the fastest pace since 2010.

Data from the State Administration of Foreign Exchange showed payments jumped 22.8% to 1.18 trillion yuan, or $169 billion, in 2025.

Bloomberg’s calculations matched the figures. Trade between China and the European Union reached $828.1 billion in 2025, up 5.4% from the prior year. SAFE data showed the Euro

If you're reading this, you’re already ahead. Stay there with our newsletter.

Disclaimer: For information purposes only. Past performance is not indicative of future results.
placeholder
Bitcoin Tops $95,000 Amid Two-Month High, but U.S. Demand Lags Behind Global RallyBitcoin prices climbed above $95,000 on Tuesday, reaching their highest level in two months. However, a key market indicator suggests U.S. investor participation in the rally has been noticeably weaker compared to overseas demand.
Author  Mitrade
Jan 14, Wed
Bitcoin prices climbed above $95,000 on Tuesday, reaching their highest level in two months. However, a key market indicator suggests U.S. investor participation in the rally has been noticeably weaker compared to overseas demand.
placeholder
Jefferies Predicts Strong Growth in Chinese AI Stocks Amid Narrowing Valuation GapsJefferies analysts highlight the growth potential of Chinese artificial intelligence stocks, forecasting significant upside as valuations converge with U.S. peers. Increased capital spending and government support further enhance optimistic outlook through 2026.
Author  Mitrade
Jan 14, Wed
Jefferies analysts highlight the growth potential of Chinese artificial intelligence stocks, forecasting significant upside as valuations converge with U.S. peers. Increased capital spending and government support further enhance optimistic outlook through 2026.
placeholder
Australian Consumer Confidence Declines Amid Rising Interest Rate ConcernsConsumer confidence in Australia fell in January, driven by increased worries about interest rates and job security. The Westpac-Melbourne Institute Consumer Sentiment Index remains in pessimistic territory below neutral levels.
Author  Mitrade
Jan 13, Tue
Consumer confidence in Australia fell in January, driven by increased worries about interest rates and job security. The Westpac-Melbourne Institute Consumer Sentiment Index remains in pessimistic territory below neutral levels.
placeholder
Gold, Silver Hit Records as Fed Independence Fears, Iran Unrest Fuel Haven RushGold and silver surged to all-time highs on Monday, propelled by mounting concerns over Federal Reserve independence after the U.S. Justice Department threatened a criminal indictment against the central bank, alongside escalating geopolitical tensions as protests in Iran intensified.
Author  Mitrade
Jan 12, Mon
Gold and silver surged to all-time highs on Monday, propelled by mounting concerns over Federal Reserve independence after the U.S. Justice Department threatened a criminal indictment against the central bank, alongside escalating geopolitical tensions as protests in Iran intensified.
placeholder
Gold Prices Soar to Record High Amid Disappointing U.S. Jobs Data and Geopolitical Tensions Gold prices surged to a record $4,601.17 per ounce as weaker-than-expected U.S. payroll data heightened expectations for Federal Reserve interest rate cuts. Ongoing geopolitical tensions in the Middle East and Venezuela further supported the metal's appeal as a safe haven.
Author  Mitrade
Jan 12, Mon
Gold prices surged to a record $4,601.17 per ounce as weaker-than-expected U.S. payroll data heightened expectations for Federal Reserve interest rate cuts. Ongoing geopolitical tensions in the Middle East and Venezuela further supported the metal's appeal as a safe haven.
goTop
quote