The long-standing trade war and the respective trade tone offer traders discomfort. In August there was a global rush to perceived safe-haven assets due to the international trade tensions.
August was a particularly bad month for equities. International trade tensions and fears over the global economy encouraged investors into bonds and gold, perceived as safer bets in times of economic and political clash. The gains for safe heaven assets are fuelled by a global rally in government debt. Yields in major developed markets push deeper into negative territory.
Washington is due on Sunday to start imposing 15% tariffs on $125 billion of goods from China, affecting consumer items. Investors fear the intensifying trade dispute could lead the U.S. economy into recession.
But, on Friday there are signals that United States and China will resume trade talks, easing worries about further damage. Risk assets got a mild lift on Thursday after China’s commerce ministry said Beijing and Washington were discussing the next round of face-to-face talks in September. But the effect was short-lived.
Focus is moving to weekend data from China, especially its official manufacturing survey. It is expected to show factory activity contracted in August for the fourth straight month.
START TRADINGForex – Trade tone and fears over global economy weigh
Political risks from the UK to Hong Kong and the Middle East added to risks for the global economy and kept many investors on edge.
An index that tracks the dollar against a basket of six other currencies was flat at 98.557.
The Japanese Yen, which typically gains during periods of economic and geopolitical uncertainty, edged 0.1% higher against the dollar to 106.39 yen. It is up more than 2% in August for its biggest monthly gain since May.
The euro, meanwhile, plunged to a one-month low against the dollar. Investors looked for aggressive easing by the ECB and ignored doubts among some policymakers over the need for more stimulus. The euro was down 0.1% at $1.1043 after falling to $1.1033, its lowest since Aug. 1. It has shed nearly 12% against the dollar since the start of last year.
The pound stabilised despite growing probability of Britain crashing out of the EU on Oct. 31 without a divorce deal. British Prime Minister Boris Johnson received royal approval this week to suspend parliament for a month. Sterling’s reaction, however, was fairly modest, remaining quite a way off the 2-1/2-year low of $1.2015 reached this month.
The Swiss franc has gained 0.7% so far this month, to 0.9879 per dollar.
The Australian dollar slipped toward a 10-year trough. The aussie, often seen as a proxy bet on the Chinese economy, fell 0.31% to $0.67095.
The New Zealand dollar dropped 0.30% to a four-year low of $0.6290. The kiwi is the worst performing G10 currency this month with a fall of 4.1%.
PLEASE NOTE The information above is not investment advice.
Sources: Reuters, Investing, CNN money