The U.S. dollar kicked the week off on the back foot, as financial markets showed worry about renewed escalation of the trade spat between the U.S. and China.
On Friday, a Bloomberg report indicating that President Donald Trump wanted to proceed with import tariffs on some $200 billion more Chinese goods, which could be announced as early as this week, while The Wall Street Journal cited a senior Chinese official saying China wasn’t “going to negotiation with a gun pointed to its head.”
“The markets remain on edge regarding the possible fresh set of tariffs from the U.S. against China, with President Trump clearly eager to ratchet up the tensions,” wrote Boris Schlossberg, managing director of FX strategy at BK Asset Management.
Early Monday Trump tweeted that of the success of tariffs as a negotiating tactic, while also threatening further levies if trade partners weren’t making “fair deals.”
Tariffs have put the U.S. in a very strong bargaining position, with Billions of Dollars, and Jobs, flowing into our Country – and yet cost increases have thus far been almost unnoticeable. If countries will not make fair deals with us, they will be “Tariffed!”
— Donald J. Trump (@realDonaldTrump) September 17, 2018
The ICE U.S. Dollar Index
DXY, -0.48%
was down 0.2% at 94.772, adding on to last week’s loss of 0.5%. Its main rival, the euro
EURUSD, +0.6023%
last $1.1658, benefitting from the weaker buck, compared with $1.1622 late Friday.
China’s yuan meanwhile was little changed in Beijing
and marginally stronger versus the greenback in the offshore market
One dollar bought 6.8692 onshore and 6.8691 offshore.
Elsewhere, the British pound
GBPUSD, +0.6581%
strengthened and broke through the psychologically important barrier of $1.31, on the back of hopes of progress in the Irish border Brexit question. While Northern Ireland is part of the U.K., the Republic of Ireland is a European Union member state, raising the question of the future of the currently open border between the two countries.
Brussels’ chief negotiator Michel Barnier is considering spot-checking goods headed for Northern Ireland to ensure they meet the rules of the eurozone single market.
Brexit negotiations between London and Brussels are back in focus this week, with the first of three summits held on Thursday. Officials comments over the past weeks have shown that both the EU and the U.K. are hoping to come to an agreement about their post-Brexit relationship in the coming weeks.
Sterling last bought $1.3111, compared with $1.3068 late Friday in New York. The currency “will be exposed to volatility throughout the coming week,” said Jameel Ahmad, global head of currency strategy and market research at FXTM. “U.K. Prime Minister Theresa May is set for another round of key Brexit discussions throughout the week and the pound has shown on various occasions in the past couple of weeks that it remains highly sensitive to Brexit headlines. If concerns mount that the U.K. is heading towards a hard Brexit, we shouldn’t be surprised if sterling once against falls below $1.30 this week.”
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Source : MTV
