The dollar is weak this morning, as the rhetoric around the US-China trade war continues to worsen. China have set the official reference rate to 7.0039 yuan per dollar today, the weakest level since April 2008. A weaker yuan now makes Chinese exports more attractive, potentially giving China a trade advantage. It is thought that China could be deliberately holding out for a trade deal until after the 2020 Presidential election. This would certainly be a blow to Trump’s campaign.
President Trump has once again complained that the Federal Reserve should be responding by cutting interest rates in a more aggressive manner. It’s thought unlikely that he’ll ask the Treasury to intervene and weaken the dollar, however this scenario cannot be ruled out.
Despite all of this, White House officials say that they still expect Chinese negotiators to visit Washington in September.
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