Some Chinese businesses start to make arrangements already, in case of the event that further tariffs are put in place by the US. This has the potential to affect the trading relationship of the world's largest two economies. Today's USD report looks at how this could affect the currency in the coming months, the table below shows the difference in US Dollars you could have achieved when buying £200,000.00 during the high and low points on Monday.
|Currency Pair||% Change||Difference on £200,000|
The US- China trade war continues and its implications should not be underestimated. Trump is trying to “make America great again” by making Chinese imports more expensive in order to boost US manufacturing.
The problem you have is the reliance is so heavy on Chinese imports that tariffs could cause significant problems for both economies.
Chinese businesses are already making arrangements if there are further increases in Tariffs. Some exporters are already upping prices and shipping early. They are also looking at new markets as a 25% increase in some fields of business would turn profits to losses in the US market.
With the world’s largest two economies involved in a trade war it does not bode well for global growth.
The Syria situation could also create uncertainty for the Dollar. The mounting tensions between Russia and the US could mean there could be further trade wars on the agenda.
It is a very difficult call as to how the market will react as despite the US being involved in the conflict the US Dollar is considered a safe haven currency so we could in fact see Dollar strength should the situation escalate.
Those buying the Dollar with Sterling should certainly be happy at current levels. GBP/USD now sits at some of the most favourable rates since June 2016.
Today we see speeches from Federal Open Market Committee (FOMC) members, John C Williams, Federal Reserve President of San Francisco and Charles Evans, Federal Reserve President of Chicago.
The interest rate outlook for the States has huge global influence due to the US being the world’s largest economy.
It has been predicted there could be as many as three further rate hikes by the Fed this year and this has largely been filtered into current levels already as the market moves on rumour as well as fact.
Despite the Federal Reserve being meant to act as a separate entity to the US government, I think politics may influence monetary policy. The US-Chinese trade war could put some doubt on the potential US rate hikes. If there any hint of a delay in rate hikes from the Fed speeches we could see US Dollar weakness.
For more information on how future data releases could affect your currency requirement, call our trading floor on 01494 725 353 or email me here.
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