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US Dollar Rises to 11-Month High; Trump Doubles Down on Trade Threats

Published June 19, 2018
  • The US dollar moved to an 11-month high this morning in reaction to further escalations in the US–China trade spat; the Trump Administration has asked trade officials to identify a further $200 billion worth of Chinese imports that would be subject to additional tariffs of 10 percent.
  • Trump stated the new trade duties will go into full effect if “China refuses to change its practices”; the US president also noted that this new round of tariffs is in response to China’s retaliatory efforts last week which demanded a 25 percent tariff on $34 billion worth of US goods.
  • Despite this, China has again vowed that it will counter these new tariffs if the US implements them; global stock indices have dropped, with Dow-futures dropping a for a sixth losing session in a row in response to these growing tensions.
  • USD/CAD has yet again moved higher, nearing 1.3300 this morning as risk-off sentiment moves investors away from the loonie and towards other safe-haven assets. Analysts are also noting that tariffs may quicken the interest rate hike cycle in the US as rising import prices (induced by trade protections) would ultimately drive inflation higher as well.
  • Oil prices also remain volatile as investors speculate over the on the result of this week’s OPEC meeting; WTI futures are down nearly 1.3 percent on news that Saudi Arabia may lean in relaxing oil production cuts.