Rising Trade War Tensions Force US Dollar Further Low
The global economy is suffering due to the ongoing US-China trade war and Brexit. While the increasing tensions due to the trade war have pushed the US dollar further low on the charts, pound sterling hit a one-month low amid the Brexit chaos between Britain and the European Union.
Moreover, the visa restrictions imposed on Chinese officials by the US over the treatment of Muslim minorities have further aggravated the situation. The trade negotiations have affected the economy of both the US and China.
Besides the low dollar, the trade war has affected manufacturing activities all over China, Germany and the US. Also, Europe and Asia which rely on the US and China for production of many products are undergoing heavy repercussions due to the trade war.
In order to ease the tensions, Vice-Premier Liu He is going to lead China’s delegation to Washington on Thursday and Robert Lighthizer will be the US’ Trade Representative in the meeting. After the collapse of discussions in May, this will be the first meeting between the top negotiators of the two countries in the US.
As per reports, the upcoming discussion is not expected to give a positive outcome. Especially after US President Trump highlighted that anything “bad” in the way the Chinese government is handling the Hong Kong protests could affect the discussions’ result.
The greenback rose slightly to 107.14 Japanese yen JPY= and was steady at $1.0962 on the euro EUR=. It was flat around 99.093 against a basket of major currencies.
Even the most sensitive currency of the trade discussions, Chinese Yuan had plunged to a one-month low in offshore trade overnight. The Australian and New Zealand dollars reached high, with the former rising 0.2 percent to $0.6741 and the latter soaring 0.3 percent to $0.6312.
On the other hand, pound is also suffering due to the Brexit issue.
Since the early September, the GBP reached its lowest at $1.2214. After British Prime Minister Boris Johnson received a telephone call from German Chancellor Angela Merkel saying that the deal was “overwhelmingly unlikely”, scepticism over the consequences of a No-deal Brexit continues to prevail.
As per The Times, a group of ministers in the UK cabinet have announced a rebellion as they are against Johnson for leading the country into a no-deal exit.
As per Han Tan, the FXTM analyst, “The ever-fluid Brexit saga is expected to leave the pound exposed to politically-driven bouts of volatility over the coming weeks.”
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