NEW YORK, July 21, 2018 (BSS/AFP) – The dollar slid against the euro and
pound Friday as US President Donald Trump adopted an aggressive posture on
trade and foreign exchange, stoking talk of a currency war in addition to a
trade war.
In an interview with CNBC television broadcast Friday, Trump bluntly
threatened to slap all Chinese imported goods with tariffs, saying the US has
been “ripped off by China for a long time.”
Later in a pair of tweets, Trump attacked China and the European Union for
keeping their currencies low to gain a trade advantage, while again blasting
the Federal Reserve for raising interest rates.
That came after CNBC on Thursday aired portions of a Trump interview in
which he criticized the Federal Reserve’s current course of interest rate
hikes.
The dollar fell against most major currencies on Friday, adding to
Thursday’s declines.
“Currency is now part of the trade war, folks,” said Greg McKenna, market
strategist at AxiTrader.
“And it is worth pondering whether this is a president who is going to
break with 25-30 years of tradition in not interfering in Fed policy
deliberations going forward.”
The currency movements also reverberated in foreign stock markets,
pressuring bourses in Tokyo, Europe and London.
US stocks finished the session mildly lower, with Trump’s comments on trade
and the Fed offsetting a round of mostly solid US earnings reports.
– Yuan weakness hits imports –
But Trump’s comments did not do much to push the dollar down versus the
yuan, however. The Chinese central bank implemented the sharpest one-day
lowering of the trading range for the yuan in two years.
The yuan, which has fallen about 10 percent since mid-April, is expected to
extend its steady decline, providing Beijing with a buffer against punitive
US trade tariffs.
“Chinese authorities have been responding to Mr. Trump’s threat of tariffs
(by) continuously devaluing the yuan, a policy move that has the impact of
making exports into China more expensive,” said Boris Schlossberg, managing
director at BK Asset Management.
“Trump has been clearly bothered by this tactic and yesterday’s comments
reflected his frustration at losing the battle in the trade war.”
Jasper Lawler, head of research at London Capital Group, called China’s
lowering of the trading band “the starting of a currency war” in response to
the trade war.
Fears are growing over a fierce global trade war, after Trump’s imposition
of hefty import taxes on steel and aluminum from the EU, Canada and Mexico,
in addition to levies already on goods from China worth tens of billions of
dollars that have sparked retaliatory tariffs.
European stocks slid sharply in afternoon trading, buffeted by their
stronger currencies, but clawed back much of their losses. London closed less
than a tenth of a percentage point lower while Frankfurt ended the day down
nearly 1.0 percent.
– Key figures at 2100 GMT –
New York – Dow: DOWN less than 0.1 percent at 25,058.12 (close)
New York – S&P 500: DOWN 0.1 percent at 2,801.83 (close)
New York – Nasdaq: DOWN 0.1 percent at 7,820.20 (close)
London – FTSE 100: DOWN 0.1 percent at 7,678.79 (close)
Frankfurt – DAX 30: DOWN 1.0 percent at 12,561.42 (close)
Paris – CAC 40: DOWN 0.4 percent at 5,398.32 (close)
EURO STOXX 50: DOWN 0.2 percent at 3,464.08 (close)
Tokyo – Nikkei 225: DOWN 0.3 percent at 22,697.88 (close)
Hong Kong – Hang Seng: UP 0.8 percent at 28,224.48 (close)
Shanghai – Composite: UP 2.1 at 2,829.27 (close)
Euro/dollar: UP at $1.1723 from $1.1642 at 2100 GMT
Pound/dollar: UP at $1.3135 from $1.3014
Dollar/yen: DOWN at 111.50 yen from 112.47 yen
Oil – Brent Crude: UP 49 cents at $73.07 per barrel
Oil – West Texas Intermediate: UP $1.00 at $70.46 per barrel