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US China Trade War Fears Re-Emerge, USD Climbs, AUD Suffers

US China Trade War Fears Re-Emerge, USD Climbs, AUD Suffers

2018-08-01 08:00:00
Martin Essex, MSTA, Analyst
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US China trade war news and analysis:

  • Donald Trump is proposing a 25% tariff on $200 billion of Chinese imports, according to Reuters.
  • However, rival newsagency Bloomberg is reporting that the US and China are seeking to resume trade talks.
  • In response, the USD is gaining while the “risk on” AUD is easing.

Our trading forecasts for Q3 have been published; you can find them here.

US China trade war fears back in focus

The administration of US President Donald Trump plans to propose a 25% tariff on $200 billion of imported Chinese goods, up from 10%, according to the Reuters newsagency, quoting a source. That is boosting the US Dollar in early European trading Wednesday, and weakening the Australian Dollar, despite a report from Bloomberg that the US and China are restarting talks to defuse a trade conflict.

The USD is seen increasingly as a “safe haven” currency while the AUD is regarded as a “risk on” currency so the AUD USD pair is falling back as traders opt for safety.

AUDUSD Price Chart, Five-Minute Timeframe (July 31 – August 1, 2018)

Latest AUDUSD price chart.

Chart by IG

FOMC meeting on the agenda

Trade war fears are dominating trading ahead of today’s US monetary policy announcement by the rate-setting Federal Open Market Committee, which is widely expected to leave interest rates unchanged ahead of a possible rate hike in September. However, traders will need to study the Federal Reserve’s decision closely for clues on the future rate path.

More to read on US China trade wars

US-China Trade War: An Inevitable Conflict and the Impact on Equities, FX

US-China Trade War & a Brief History of Trade Wars – 1900 until Present

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--- Written by Martin Essex, Analyst and Editor

Feel free to contact me via the comments section below, via email at martin.essex@ig.com or on Twitter @MartinSEssex

DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.

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