Wednesday saw a rise in dollar. This was because of the news coming in that a “Phase One” US China trade deal may not be completed this year. It raised the prospects of another hike in tariffs and spurred the demand of safe haven.
As per the reports given by Reuter, the “Phase One” US China trade deal may be carried forward to the next year. Reuter cited the trade experts and people close to the White House for this report. The reason stated for this delay is Beijing pressing for more extensive rollbacks in tariffs and that pressure is being countered by Trump administration with its own heightened demands.
The US government proposes to raise the tariffs on Chinese imports if the trade deal with China fails to materialize, to end this trade war. This was said by President Donald Trump on Tuesday. It threatens an escalation of the spat that has caused great damage in the worldwide economic growth.
The mood of the market has further deteriorated with the US Senate angered China by passing a bill requiring an annual certification of Hong Kong’s autonomy. The US senate also warned Beijing against suppressing the protestors in Hong Kong. China, in turn, has made a demand to the US to stop interfering in its internal affairs and warned for China’s retaliation.
The Dollar Index.DXY, that measures the Dollar against six major currencies, was up 0.1% at 97.949. This index earlier rose to as high as 98.038.
Minh Trang, Senior FX trader at Silicon Valley Bank said that it was the same theme that was coming back to day, which was essentially the trade tensions between the US and China. He further added that there was a bit stronger rhetoric today and it was pushing the market into a risk off zone.