The dollar ended the week slightly higher against the pound following comments from Donald Trump that a meeting between Chinese President Xi Jinping and himself was unlikely, rattling the markets as fear that a trade war escalation was likely.
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If there isn’t a meeting to try and resolve the current stand-off between the two nations before March 1st then President Trump will increase the import tariff on Chinese goods from 10% to 25% and could create a huge knock on effect throughout the world’s economies.
This has rattled investors which can be seen in global markets, which all ended the week poorly following this news. As for the US dollar, due to its safe haven status, it ended the week on a strong note as investors pile into the Greenback to avoid losses from riskier currencies.
This week is a pivotal week for trade war talks as US officials travel to China to try and resolve the deadlocks, and could cause volatility on the markets depending on the outcome. The most probable outcome is that the March 1st deadline will be pushed back, allowing for breathing space. According to reports, the Trump administration's next focus will be European cars, with a proposed 25% tariff planned all European cars entering the US. This could spell serious trouble for the Euro amid an already struggling economy in the months to come.
As mentioned in my previous section, the main headlines are likely to revolve around developments with China and the global slowdown. In my opinion, I think we could see a very strong performance for the USD in the weeks to come following heightened risk sentiment and the USD’s safe haven status. The global outlook is somewhat gloomy, with the US, Australian, European, UK and Canadian banks cooling their stance on interest rates and outlook so far in 2019. I would largely expect this news to dominate the headlines and the dollar’s value this week.
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