November 29, 2022

Oil prices drop as trade war escalates > 18.06.2018 Highlights

trade war escalates

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China is ready to respond to US $50 billion tariffs in Chinese imports announced by Trump last Friday. Fears that the trade war escalates exerted a pressure on oil prices.

China threatened to imposed duties on American crude imports. The potential drop-off in American oil exports to China would benefit other producers, especially from OPEC and Russia.

US tariffs, including tariffs on imported cars, will apply on July 6th. China’s list of U.S. goods on which would impose tariffs differs from a version released in April. The value was kept at $50 billion, although some high-value items such as commercial aircraft were deleted.

The escalating trade dispute between the United States and China keeps broader currency markets concerned. The immediate fallout from the dispute was limited in currency markets. The MSCI world equity index fell 0.3 percent, nearing a seven-day low. The MSCI world equity index tracks shares in 47 countries.

Taking into consideration that China is not the only target of Trump’s tariff policy, the situation may become extremely complicated. However, some analysts support that Trump’s announcement was only negotiating card just to put pressure on China.

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MARKETS as trade war escalates

The dollar’s index rose against its major traded rivals following last week’s FED’s signals on interest rates. The dollar fell 0.1 percent at 110.50 Yen.

Commodity-linked currencies, such as CAD, weakened as crude oil prices headed lower. The Canadian dollar edged down further after retreating to a one-year low of C$1.3210 on Friday.

The Australian dollar remained unchanged after experiencing a five-week low of $0.7426.

The Sterling fell 0.3% against a strong US dollar ahead of BoE policy meeting this week, amid Brexit-linked concerns. The pound weakened against the common currency as well.

The Euro dropped on Monday close to 3-week lows amid concerns on USA-China trade war.

Oil prices dropped ahead of OPEC meeting later this week in Vienna and reports that top suppliers will increase output.

Sources: Reuters, Euronews, bbc.com

PLEASE NOTE The information above is not investment advice.