The Australian dollar is down in today’s trading session, breaking a six-day winning streak as investors took shelter against the anticipated fallout from the New Tariffs that came into force today against China.
The Latest round of Tariffs introduced by the Trump Administration targets $200 billion worth of Chinese goods and many now expect there will be more to follow which has led to speculation that China will not take part in any more trade negotiations until after the US elections on November 6
“Both the AUD and NZD have opened almost half a per cent lower this morning on the weekend news that China has cancelled trade talks with the US,” he says, adding that “this really shouldn’t have come as any great surprise after last week’s events” said Ray Attrill, Head of FX Strategy at the National Australia.
The ploy by the Chinese to wait until after the US elections to resume talks may be based on the fact that they expect the democrats to retake the house of representatives and could therefore pressure Trump to back off on introducing any further tariffs.
Some also say that it is an insult to the Chinese government’s intelligence to ask them to continue trade talks while the US keeps introducing tariffs.
It would be ‘asking for an insult,’ if China went ahead with trade talks after the U.S. announced new tariffs and sanctions,” said Shi Yinhong, a professor of international relations at Renmin University of China.
“In the long run, there will be talks, because the trade war won’t last for thousands of years.” He added.
The trade wars between the world’s 2 super powers is likely to keep a lid on any further gains for the Australian dollar at least until after the US elections.
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