Trump’s latest threat raised fears of an impasse in the U.S.-China trade negotiations and the trade fiction goes on.
Trade-exposed currencies fell after the U.S. president threatened a trade war escalation. China condemned a U.S. senate measure backing pro-democracy protesters in Hong Kong.
Markets had hoped that a partial trade deal to end the 16-month U.S.-China trade war could be signed at a summit in Chile, which was scheduled for mid-November. The summit was cancelled, leaving the outlook for a deal unclear.
A “phase one” trade deal between the United States and China was supposed to be a limited agreement that would allow leaders from both countries to claim an easy victory while soothing financial markets. But it may be something bigger if U.S. President Donald Trump agrees to Beijing’s demands to roll back existing tariffs on Chinese goods.
The world’s two largest economies are in talks on an initial deal to reach truce in a 16-month trade dispute. The phenomenal US-China trade war has damaged supply chains and upset global markets, with Washington due to impose a new round of tariffs on Chinese goods from Dec. 15.
Minutes from the U.S. Federal reserve’s FOMC meeting in October are due at 1900 GMT. Analysts expect minor impact as the Fed made it clear in October that they were not going to cut interest rates any more this year.
START TRADINGForex – US – China Trade fiction continues
Trade-exposed currencies took a hit. After initial gains in early London trading, demand for safe-have currencies eased.
The US dollar edged higher on Wednesday as worsening U.S.-China relations fuelled demand for the greenback. After falling more than 0.5% from a one-month high of 98.44 last week, the greenback rose 0.2% against its rivals. In recent months the dollar has been trading at highs not seen since 2017. It has appreciated 10% from its February 2018 low-point and is now closer to its early 2017 peak, which was a 14-year high.
Trade-exposed currencies took a hit from the worsening U.S.-China relations. The Australian and New Zealand dollars were both down 0.4% versus the U.S. dollar.
The Japanese yen up 0.1% against the dollar and the Swiss franc broadly flat against the euro.
The pound weakened to a low of $1.2888 against a generally firmer U.S. currency which was benefiting from renewed concerns over the direction of U.S.-China trade talks. Against the euro, the pound traded as high at 85.83 pence, off six-month highs hit on Monday at 85.22 pence.
The Canadian dollar fell against the U.S. dollar to its lowest since Oct. 11 after a speech by the Bank of Canada’s senior deputy governor boosted the perceived likelihood of a rate cut.
PLEASE NOTE The information above is not investment advice.
Sources: Reuters, Investing, CNN money