CHINA and Global Trade War
Chinese Markets stay on the ball as the deadline for tariffs imposition on Chinese exports by the United States approaches. China is expected to fight back US tariffs, especially those regarding the technology firms.
However, a private survey found out that Chinese manufacturing activity slowed to some extent even prior to the imposition of the new US duties. Signs of downtrend are read as follows: Asian exporters lost momentum last month. The Chinese currency dropped 3.25% against the greenback in June. Further, the yuan extended its losses despite a firmer midpoint set by the People’s Bank of China on Monday.
EUROPE and Global Trade War
Europe is now dealing with uncertainty over the German ruling coalition of Chancellor Angela Merkel’s. It is not yet clear what is going to happen in Germany which results in widespread trade concerns, additional to EU zone factory growth slowdown.
Despite its multiple trade problems, EU warns U.S. of major hit if car tariffs imposed; Most likely European Union’s response will be counter-measures on $294 billion of U.S. exports. EU said in a submission to the US Commerce Department that tariffs on cars and car parts were unjustifiable.
The Commerce Department launched its investigation, on grounds of national security under instruction from the US President. Donald Trump has repeatedly criticized the EU over its trade surplus with the United States. Trump said last week that the government was completing its study and suggested the United States would act soon. Earlier he had threatened to impose a 20% tariff on all EU-assembled cars.
USA and Global Trade War
President Trump seems to lose his allies over the tariff war. The U.S. Chamber of Commerce started a campaign to express its opposition to Trump’s trade tariff policies.
Trade war concerns were also intensified by an EU threat to hit the United States with retaliatory tariffs.
The dollar soared on Monday against its major-traded rivals, close to one-year peak; It seems that traders believe that global trade dispute will hurt less the US economy. The dollar extended its gains against the Yen to a new 6-week high, although it is currently the favored risk-off asset, ahead of the Swiss Franc and gold.
The Australian dollar weakened 0.5% against the greenback while the Canadian dollar dropped 0.3%.
The Sterling dropped 0.3% near its 8-month low despite the stronger-than-expected manufacturing sector data. Brexit cabinet meeting and economy weakness were among the traders’ concerns. The pound fell almost 0.2% against the euro to 88.29 pence per Euro.
The Euro slipped almost 0.5% against the US Dollar. The single currency negatives include potential US tariffs on automobile sector and growth slowdown.
Oil prices fell as supply rose by OPEC’s member Saudi Arabia and Russia. President Donald Trump warned OPEC to stop manipulating oil markets. He put pressure on U.S. ally Saudi Arabia to raise supplies in exchange for Iran lower exports. Oil prices rose last week on worries that U.S. sanctions against Iran would tighten volumes of crude oil from world markets while global oil demand increases.
Sources: Reuters, Euronews, bbc.com
PLEASE NOTE The information above is not investment advice.