Markets Fear U.S.-China Trade War Could Morph Into Full-Blown Currency War By Investing.com

0
9



By Jesse Cohen

Investing.com – Market focus remained largely attuned to the next potential steps in the U.S.-China trade dispute as investors feared that ongoing weakness in China’s yuan would expand the scope of the trade war to include currencies.

China’s central bank set the official midpoint reference rate for the yuan at per dollar on Tuesday.

It was the fourth consecutive session where the People’s Bank of China set the figure at a level weaker than the psychologically important 7-dollar level.

The yuan depreciated past the symbolic 7-dollar mark last week for the first time since the 2008 Global Financial Crisis.

That prompted Washington to label China a currency manipulator for the first time since 1994, sharply escalating the ongoing dispute between the world’s two largest economies.

Several investors viewed the move in the Chinese currency as a direct response to Trump’s latest threat to slap fresh tariffs on an additional $300 billion in Chinese goods starting Sept. 1.

The ongoing weakness in the yuan has prompted speculation that policymakers in Beijing are allowing their currency to weaken in order to boost exports and offset the impact of U.S. tariffs.

U.S. President Donald Trump said last week he was not ready to make a deal with China, pouring cold water on any hopes that the dispute would end soon.

Tensions between the two economic superpowers have dominated headlines for more than a year, with both sides imposing tit-for-tat tariffs on each other’s products.

The standoff has raised concern in the market about a potential slowdown in global economic growth.

The U.S. and China will resume trade negotiations in Washington in early September.

U.S. President Donald Trump complained about the strength of the dollar on Twitter last week, once again blaming the Federal Reserve, which he has repeatedly accused of not cutting interest rates fast enough.

The comments raised concern that the risk of intervention to weaken the dollar was growing.

To see more of Investing.com’s weekly comics, visit: http://www.investing.com/analysis/comics

Reuters contributed to this report

Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.





Source link

LEAVE A REPLY

Please enter your comment!
Please enter your name here