The tariff rate on country China will remain at 145%. This acoustics announcement comes as the 90-day deadline for serious negotiations to get underway ticks ever closer. President Donald Trump is reportedly doing everything he can to get a trade deal with China done before this deadline runs out. He added that he was cautiously optimistic that formal agreements can be completed soon, even with the current state of heightened tensions between the two countries.
With the deadline approaching, fiscal markets are reacting to the uncertainty affecting US-China relations. The EUR/USD currency pairing has pulled back from its most recent multi-month peak of 1.1473. Despite these strengths, EUR/USD continues to trade firmly under the 1.13000-level. At the same time, the GBP/USD cross has given back a chunk of its day’s advances, having backed off from new peaks just below 1.3150. The US Dollar is feeling the heat as trade wars get out of hand. Concerns about an impending recession are growing nationwide.
We can chalk that downward trend of the US Dollar up to an even more unexpected surprise of weaker-than-expected Producer Price Index (PPI) data that got recently released. After the PPI report shocked everyone by showing inflation reigniting, that led to doubting the effectiveness of the Federal Reserve’s HOOT monetary policy. Treasury Secretary Steven Mnuchin is closely monitoring the bond market, indicating the administration’s awareness of the potential implications of these economic indicators.
And, with the exception of steel and aluminum, Trump’s administration is still interested in reaching a trade agreement with China, even with the tariffs now in place. From Karoline Leavitt, spokesman for then-candidate Trump, The President has always been hopeful and confident that we could get a better trade deal. Most importantly, over 15 positive trade deals are already proposed, illustrating the years of fruitful negotiation between the two countries.
Given all this activity, you might think that optimism abounds, but investors would do well to exercise a bit of patience. A very high percentage of retail investor accounts lose money when trading Contracts for Difference (CFDs) with these providers. This serves to illustrate the associated risks in CFD trading. This statistic is a wake-up call to the dangerous nature of trading in highly volatile markets.
Whatever transpires, the US Dollar will certainly continue to be volatile. This movement will largely be dictated by new trade negotiation headlines and economic data releases. Our financial community remains on guard. This community looks forward to future announcements from the White House and international players frequently seated at this table to advance these discussions.