Dollar Goes Uptrend as US-China Dealings Worsen Over Tariffs

WASHINGTON, Calif. – Dollar rises on Wednesday as US-China relations start to worsen over a recent statement from Washington.

During the start of the trading day on Wednesday, the US dollar was in an optimistic route while other currencies sensitive to updates on trade talks fell considerably after the US President threatened to raise the existing tariffs on Chinese goods further if the trade war continues and the two countries fail to finalize negotiations.

Conflicting sentiments on the global market also came after China denounced a US Senate legislation that backs the pro-democracy protests in Hong Kong.

China has also expressed its displeasure about the US interfering with what is ongoing political unrest and protests in Hong Kong. The Chinese government has condemned the legislation the US made with a goal to protect the human rights in Hong Kong amid protests that have been going on for months.

According to the currency strategist at Rabobank, Piotr Matys, the primary focus in the global market today is the ongoing trade talks between the US and China, and the market is expecting a risk aversion. Further, the Senate bill of the US that aims to support Hong Kong could hinder the progress in reaching phase one of the trade deal, Matys said.

The trade talks between the US and China, two of the biggest economies in the world, has been going on for over 16 months, affecting the global market since. Markets had hoped that the two countries would sign a partial trade agreement during the summit in Chile in the middle of November. However, the summit was canceled, citing unrest in the country and leaving the prospect of ending the trade war unclear.

After four straight days of bearish sentiments, the US dollar gained an upward trend, rising to a modest but optimistic 0.1% against Euro and other currencies.

On the other hand, Chinese yuan dropped to its latest two-week low in just 24 hours after President Trump dropped the statement on a possible increase of tariffs against China during a cabinet meeting.

The Canadian dollar also experienced a decline against the US dollar, its lowest value since October 11. The drop came after the senior deputy governor of the Bank of Canada made a speech, which powered the belief of a possible rate cut.

Trade-exposed currencies such as New Zealand and Australian dollars also took a hit from the recent update on trade talks, with both tumbling down about 0.4% against the US dollar. The Swedish crown lost over the dollar by 0.4% and 0.7% against the euro. The Norwegian crown also dropped about 0.9% against the dollar and 0.7% against the euro.