EU and China Face Off Against Trump; Oil Sands Shutdown Creates Oil Market Panic
Published June 26, 2018
The greenback continues to rise, almost making a 6% increase from its three year low in February, as investors ponder the impact of protectionism amid the recent escalations in trade tension. USD/CAD is trading around 1.3315 this morning.
The shutdown of a key oil sands facility in Canada is leading to mass confusion for the global oil market and has slammed shares of producers that depend on the plant. Just as OPEC and allied producers agreed to pour more oil into global markets, a transformer blast last week cut power to Alberta’s giant Syncrude plant, which turns heavy crude into synthetic light oil for US markets. West Texas Intermediate was trading at $68.12 at the time of writing.
Financial markets in China are suffering after trade tensions and a domestic campaign to deleverage provided ample signals to sell. The Shanghai Composite Index entered a bear market, ending 20% below its January high as the yuan was fixed at a reference rate of 6.518 per dollar.
China and the European Union vowed to oppose trade protectionism in an apparent rebuke to the US, saying unilateral actions risked pushing the world into a recession. President Xi Jinping’s top economic adviser stated that China and the EU have agreed to defend the multilateral trading system, following talks Monday in Beijing. The comments come as the European Commission and China prepare to face off against President Donald Trump’s tariff threats.