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