US-China trade dispute drives dollar, global equities and US 10-year note lower
Kathryn Garvey | May 13, 2019
Friday’s slap of tariffs on Chinese imports lead to retaliation from China as additional tariffs were imposed on $60B worth of US goods. GBP and EUR movements are driven mostly by news surrounding US and China. The pound gained some traction above the 1.30 handle and the euro also pushed higher on dollar weakness.
Monday: JN BoP Current Account Balance
Tuesday: German ZEW Survey Expectations, UK Jobless claims, German CPI
Wednesday: Canada CPI, US Retail Sales
Thursday: US Jobless Claims, US Housing Starts
Friday: U. of Mich. Sentiment
May 13, 2019
EUR/USD 1.1255 GBP/USD 1.3024 USD/CAD 1.3429 AUD/USD 0.6966 USD/JPY 109.09 USD/CNH 6.9154 USD/ILS 3.5712 USD/MXN 19.1741 USD/CHF 1.0056 USD/INR 70.5238
The greenback is flirting with new lows near the 97.00 handle and the 10-year note dropped to 2.41% after China’s announcement of retaliatory tariffs on $60B of US goods. This follows the additional tariffs in US imports on Chinese goods that were imposed on Friday. In the heat of the trade war, market chatter pointed to the possibility of China dumping US Treasuries.Speeches are due today by the Boston Fed, FOMC’s Clarida and the Atlanta Fed.GBPThe pound regained traction to climb above 1.30 after dropping mid-day on Friday fueled by a slightly weaker tone surrounding the USD. PM May is set to reopen Brexit talks with EU officials about a future customs deal to reignite stalled negotiations.EUR
The euro pushed higher after China said it would impose tariffs on 5,000 US products responding to the US’s threat to impose additional tariffs unless China makes new concessions. Political headwinds are set to become an emerging factor due to the upcoming EU parliamentary elections scheduled for the end of the month.CADThe Canadian dollar fell as demand for haven currencies rose after China said it would raise tariffs on US goods as trade tensions escalated through the weekend. Higher oil prices failed to assist in strengthening the currency.ASIA/PACIFICChina plans to raise tariffs on $60B worth of US goods after trade tensions escalated over the weekend. On Friday, the US imposed a 25% tariff on more than $200B of Chinese goods – up from 10% previously. The renminbi suffered the largest 1-day drop since August and global equities tumbled.
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