Trump shelves trade sanctions but currency wars range on
Currency – The global currency markets haven’t shown any signs of slowing down. Not even after the U.S President Donald Trump decided to postpone additional tariffs on Chinese goods. Trump made the announcement on Tuesday, a move that sparked risk-off trades as investors lost hope on the likelihood of a resolution to the trade spat. Most analysts believe that the delayed 10% tariffs on consumer goods had nothing to do with creating room for negotiation. Rather, everything had to do with reducing the impact such a drastic move would have on the upcoming holiday sales.
The risk-off continued into Wednesday as evidenced by the rise of the safe-haven Yen against major global currencies.
At the Asian market open, the dollar was trading at 106.42 yen, dipping 0.28%
The news Zealand Dollar and the Australian Dollar opened the markets trading at 68.71 yen and 72.25 yen signifying a 0.3% and 0.6% dip respectively.
What did the experts say?
Experts urge global currency investors to brace for sustained risk-off and thinned risk-on trades even if the year-old U.S – China trade spats wear off. JP Morgan’s Head of Japan market research in Tokyo, Tohru Sasaki argues that there are a lot of “geopolitical risks such as Hong-Kong (unrests), Brexit, and the Iranian situation” that collectively continue to pile pressure on global currencies independent on the Trump-Ping trade wars.
Trade slow-paced negotiations between China and the US trudge on. Both parties continue threatening each other with increased tariffs. Global investors have since lost faith in the possibility of a solid resolution in the near future.
The greenback remained indifferent when compared to the rest of the leading global currencies making up the dollar index. It opened the day trading at 97.58, just about the same point it closed the day at after gaining 0.4% on Tuesday.
After the tariff halt, the dollar upped the Chinese Yuan by 0.33%.
Euro currency unaffected by Germany’s contraction or Brexit
Europe’s dominant currency – the Euro – held steady amid reports of the contraction of Germany’s economy and the ever drawing deadline for Brexit. Germany – Europe’s largest economy reported a market contraction of 0.1% for the second quarter of the year. This was a sharp dip from the 0.4% expansion reported in the first quarter. Also the first in over a decade and has since marked what analysts term the country’s golden decade.
Economy analysts attribute the sharp decline to the consistent turmoil’s in the country’s auto industry. Also the persistent U.S-China trade wars, and the possibility or a rocky Brexit. The report would further compound fears of a looming global recession after months of a slowed global economic growth.
The Euro opened the day on a high against the dollar – trading at 1.1182
Little changed for the pound that was trading at 1.2056 against the dollar
German’s economy minister Peter Altmaier is, however, confident that the country can avoid regression. He argues that all that is needed are “investments in the digital economy and technologies of the future so that our markets remain competitive.”