There seems to be no end in sight as the escalating US–China trade war looks like a fight that could even out run Brexit negotiations. Like Brexit the Trade war is coming at a cost hurting global business sentiment.
Last week US President Donald Trump confirmed he would impose more tariffs on Chinese goods. On Monday China then responded by allowing its currency to weaken to its lowest level since 2008, with Washington accusing Beijing of being a currency manipulator. After continuing to weaken, the Yuan held around the 11 year low before Beijing appeared to take steps to stabilise the currency.
The continued back and fourths between the US and China may have contributed to the US dollar loss of value against other safe haven currencies like the Swiss Franc and Japanese Yen, with international growth worrying investors with the US at the heart of the concerns. If a solution cannot be found in the near future it could prove costly for the US dollar, What is clear neither Trump or China are likely to back down easily so expect this one to drag for some time yet.
Despite the Federal Reserve cutting rates at it’s last policy meeting Jerome Powell was keen to stress that the US economy continued to perform well and its decision was more based on the economic global slowdown rather than a complete reflection of the US, but left room for further discussion of more policy adjustments if and when needed.
US economic data: Jobless claims and Producer Price index
US data due out for the remainder of the week, includes US Jobless claims expected to repeat last months reading of 215k, scheduled for 13:30 today and Friday sees the release of Producer Price Index forecasted at 1.8% up by 0.1% on the previous month. Any surprises could see a significant move in either direction for the USD. You may wish to contact you’re your account manager to be keep you informed.
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