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Further Sino-US trade dispute escalation

Published August 9, 2018

Author: Dennis Li

With a further escalation of the tariff war between the two biggest economies, we saw the Aussie having a volatile night against the USD albeit within a tight range once again commencing the day above 0.7400 supported by solid export data from China.

  • China’s commerce ministry announced it will start imposing 25% tariffs on $US16 billion worth of goods ranging from fuel and steel products to autos and medical equipment on 23rd August, the same day that the US plans to begin collecting 25% extra in tariffs on $16 billion of Chinese goods.
  • Amid the growing Sino-US trade tensions, China’s exports growth unexpectedly accelerated in July while its trade surplus with the US remained near record highs. Imports also rose faster in July mainly thanks to its solid domestic demand with purchases of commodities like copper and iron ore rising from June.
  • The UK sterling suffered a heavy sell-off on Wednesday, stumbling to a near one-year low against the USD at 1.2851 as there is a significant increase in investors hedging against a ‘no-deal’ Brexit. Overnight, the AUDGBP also reached its near seven-month high of 0.5771.
  • Oil slid about 3% overnight as US-China trade dispute escalated further while Chinese import data showed a slowdown in energy demand.