Goldman Sachs have stated that the US/China trade war could lead to a US recession.
The investment firm believe the trade war could continue past a 2020 US general election and Goldman Sachs went on to say it has “increased it’s estimate of the growth impact of the trade war”.
“We expect tariffs targeting the remaining $300billion of US imports from China to go into effect,“ the bank said in a mail sent to clients.
Recent events have seen the trade war escalate. Trump has imposed a 10% tariff on a further $300bln worth of Chinese goods and China retaliated by trying to halt purchases on US agricultural products. The US has also made accusations against China manipulating its currency.
Goldman Sachs said it had lowered its fourth-quarter US growth forecast by 20 basis points to 1.8% on a larger than expected impact from the developments in the trade war. The situation does have the potential to cause US dollar weakness, but Brexit seems to outweigh the current situation in the US.
US Consumer Price Index data (CPI) is a measure of inflation and can influence monetary policy as CPI is a clear indicator as to the health of an economy. This data will be released later today.
There is expected to be a rise from 0.1% to 0.3% on month on month data, if figures arrive away from expectations this has the potential to cause movement for US dollar.
You may wish to keep an eye on retail sales on Thursday as this also can influence the value of the dollar.
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