Published: Mon, July 23, 2018
Money | By Armando Alvarado

Beijing unusually muted since Trump’s latest US$500 billion threat

Beijing unusually muted since Trump’s latest US$500 billion threat

The remarks, in a tweet and an interview with CNBC, suggested to market participants that the US-China trade war is now broadening to include currencies, putting fresh scrutiny on Chinese management of the yuan.

The S&P 500 index lost 0.4 per cent to 2,804.49 on Thursday.

China imports far less from the U.S., buying about US$130 billion in American goods previous year, so it does not have as much to leverage with tariffs, but it could use other measures to hit trade such as tightening regulatory oversight.

EARNINGS: Microsoft continued to set records after its fiscal fourth-quarter results topped Wall Street forecasts and its cloud computing division continued to grow.

Home furnishings chain At Home Group Inc (HOME.N) said it would make adjustments to its supply chain to mitigate the impact of the proposed tariffs on goods imported from China.

Trump has ordered the Commerce Department to investigate whether auto imports pose a threat to US national security that would justify tariffs or other trade restrictions. The Australian dollar climbed to $0.7425 from $0.7358.

Japan's Nikkei 225 bucked the regional trend, losing 0.3 per cent to 22,697.88. A manager at Qiwang Textile Product Wu Yuepei said, "Usually the goods only take 10 days to reach USA customers". The MSCI Emerging Market Index gained 1.1 percent. Earlier this year, he used national security as a justification for taxing imported steel and aluminum.

Asian markets wobbled on Friday on signs that China and the U.S. were readying for the imposition of more tariffs on
President Trump Eyes an Additional $500B Worth of Tariffs on Chinese Goods

After Beijing offered this spring to buy more natural gas and farm goods from the narrow the trade deficit, Treasury Secretary Steven Mnuchin said the trade war was "on hold". If the answer is yes, the administration says it could slap 20 percent to 25 percent tariffs on $335 billion of auto imports. "If Chinese policymakers are holding out for a large correction in the United States stock market, they might be stuck in a holding pattern for a long time". Additionally, policymakers might become more tolerant to renminbi depreciation, although they are unlikely to weaponize the currency.

Last month, the Fed raised its benchmark rate for a 2nd time this year and projected 2 more increases in Y 2018.

The dollar was on the defensive against the yen and euro early Friday after U.S. President Donald Trump expressed concern about the currency´s strength and the Federal Reserve´s interest rate increases.

The dollar had reached that high after Federal Reserve Chairman Jerome Powell expressed confidence in the USA economy and affirmed expectations that the central bank was on track to keep hiking interest rates gradually.

Regulators also want to avoid reigniting fears of a devaluation, which could prompt capital to flee China, pushing up borrowing costs and weighing on economic growth.

THE ongoing US-China trade tension may disturb the typical summer lull, while disappointing Chinese activity data (Monday) should remind investors that the current trade dispute is occurring when the Chinese economy is already slowing.

The pound has had a bruising week, closing near its lows against the euro, but it has managed to recover some of its losses against the United States dollar, as attention now shifts to what the Bank of England might do when it meets in just under two weeks at its next rate meeting. Brent crude, used to price global oils, gained 30 cents to at USD72.88. Rufus Yerxa, president of the National Foreign Trade Council and formerly deputy director general of the World Trade Organization, said President Trump appears to think that America's trading partners will yield to pressure without securing any concessions in return.

N.Korea economy shrinks at sharpest rate in 20 years
He also told Republican lawmakers at the White House that the U.S.' relationship with North Korea is " very good ". The Trump administration has also sought to deprive North Korea of the fuel it needs to keep its economy running.

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