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Trade tensions weigh on global economy again

Published August 24, 2018

Author: Dennis Li

Overshadowed by its internal political uncertainty and external pressure from escalated trade tensions, we saw the Aussie down against the major currencies across the board with the AUDUSD dropping more than 100 points, down by 1.48% while the AUDEUR tumbled by 0.92%, breaking through its key support level of 0.6300.

  • A noon showdown today for the leadership of the Liberal Party may seal the political fate of our current Prime Minister Turnbull and decide who becomes his successor.
  • The resumption of trade talks in Washington between mid-level officials from China and US could not stop the further escalation of trade wars between the world’s two biggest economies on Thursday with 25% tariffs imposed on US$16 billion worth of each other’s goods.
  • According to China’s commerce ministry on Thursday, China has filed a complaint to the World Trade Organisation (WTO) against tariffs slapped by the US on $16 billion worth of Chinese goods.
  • The number of Americans filing for unemployment benefits fell last week, signalling the US labour market was holding strong despite the intensifying Sino-US trade disputes.
  • In the minutes of their July meeting released overnight, the ECB pointed that the protectionism and the threat of a global trade war are the biggest risks to the euro zone economy but growth for now remains firmly on the path seen earlier.
  • The Japanese manufacturing activity grew at a slightly faster pace in August as domestic demand jumped while export orders contracted, adding to worries about rising trade protectionism.
  • Oil dropped on Thursday as global trade tensions offset the bullish impact of a decline in US crude inventories.