US Dollar Steadies As China Warns Of Trade Tariffs Potential Impact
The US dollar remained flat the past week even as equities plunged amidst growing concerns of escalation of trade standoff between the U.S and China. Reports that U.S administration is considering delisting Chinese companies from U.S exchanges is the latest tailwind to rock the financial markets.
A confirmation that consumers spent less and that companies are cutting back on equipment orders is another headwind that continues to take a toll on the Dollar's strength.
U.S-China Trade War Situation
The greenback was on edge last week amidst tough talk from both the U.S. President Donald Trump and Chinese representative at the United Nations conference. As Trump took a swipe at what he believes are unfair Beijing trade practices, Chinese representative, Wang Yi, maintained a conciliatory tone in a bid to quell the tensions that threaten to get out of hand.
Yi, in his remarks at the UN, reiterated that erecting walls would not solve any problems. The Chinese representative also reiterated that tariffs and provocation of trade disputes would only hurt global supply chains amidst growing concerns of a looming recession.
The remarks saw the US dollar remain flat against a basket of other major currencies at 98.72. The greenback has outperformed other currencies in recent months. However, in the recent past, it has come under pressure amidst the escalation of trade tension with China.
Safe Havens Demand
Concerns about the health of the U.S. economy appears to be taking a toll on the US dollar in the wake of the recent interest rate cut. Consumer spending on good and services rising by 0.1% in August as durable goods inched up 0.2% against a 2% rise in July is already eliciting suggestions that the U.S. economy is slowly cooling.
The greenback, however, appears to have steadied in early Monday trading session as investors turned to it because of its safe-haven attributes. Traders have had to shift attention to the likes of Dollar, Japanese Yen, and Swiss Francs in recent weeks amidst growing concerns that trade tensions could trigger the next global economic recession.
The US dollar continued to gain against trade-exposed currencies of the likes of Australian Dollar and Chinese Yuan.
The New Zealand Dollar has also continued to lose ground against the Dollar on business confidence in the country hitting an 11-year low. In contrast, the Japanese Yen and the British Pound held steady against the Dollar at 108.93 and $1.2287 respectively.