{"id":153032,"date":"2019-08-07T10:11:06","date_gmt":"2019-08-07T14:11:06","guid":{"rendered":"https:\/\/www.countingpips.com\/?p=153032"},"modified":"2019-08-07T08:11:50","modified_gmt":"2019-08-07T12:11:50","slug":"us-labels-china-a-currency-manipulator","status":"publish","type":"post","link":"https:\/\/www.investmacro.com\/forex\/2019\/08\/us-labels-china-a-currency-manipulator\/","title":{"rendered":"US Labels China A Currency Manipulator"},"content":{"rendered":"
August 7, 2019<\/div>
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By <\/strong>Orbex<\/strong><\/a><\/p>\n

Treasury Statement<\/strong><\/b><\/h2>\n

Tensions between the US and China have continued to erupt this week.<\/p>\n

President Trump unexpectedly announced fresh 10% tariffs on a further $300 billion of Chinese goods, due to start September 1st<\/sup>. Following this, the US\u00a0Treasury has now labeled China as a \u201ccurrency manipulator\u201d.<\/strong><\/b><\/p>\n

The accusation comes in the wake of the sharp weakening of CNH on Monday. This saw USDCNH trading up through the 7 level for the first time since the GFC in 2008.<\/p>\n

The Treasury\u2019s statement marks a follow through on Trump\u2019s consistent threats to reinstate the \u2018currency manipulator\u2019 label, which has not been applied since 1994.\u00a0The Treasury said that China had artificially weakened CNH against USD to gain \u201can unfair competitive advantage in international trade\u201d.<\/strong><\/b><\/p>\n

Ahead of the US Treasury\u2019s official statement, Trump took to Twitter, as usual, to criticize China, writing:<\/p>

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China Responds<\/strong><\/b><\/h2>\n

However, China has immediately responded and firmly rejected the accusation.<\/strong><\/b>\u00a0The People\u2019s Bank of China said in a statement released yesterday:<\/p>\n

\u00a0\u201cThe United States disregards the facts and unreasonably affixes China with the label of \u2018currency manipulators,<\/a>\u2019 which is a behavior that harms others and oneself\u2026The Chinese side firmly opposes this.\u201d<\/p>\n

The statement continued, with the PBoC saying that such a move by the US will not only \u201cseriously undermine the international financial order, but also trigger financial market turmoil.\u00a0It will also greatly hinder international trade and the global economic recovery, and ultimately will suffer from it.\u201d<\/strong><\/b><\/p>\n

US To Pursue IMF Decision<\/strong><\/b><\/h2>\n

While the US will now make a case to the International Monetary Fund following its accusation, the claim is unlikely to lead to any formal penalties. The accusation is more symbolic than anything.<\/p>\n

China has clearly been highly insulted<\/a>\u00a0by the move.<\/strong><\/b>\u00a0Further comments in the statement from the PBoC noted:<\/p>\n

\u201cThis unilateral act of the United States also undermines the global multilateral consensus on exchange rate issues and has a serious negative impact on the stable operation of the international monetary system\u2026\u00a0The Chinese side advises the U.S. to leap over the cliffs and return to the correct track of rationality.\u201d<\/strong><\/b><\/p>\n

Trade Deal Hopes in Tatters<\/strong><\/b><\/h2>\n

This latest escalation in tensions has cast further doubt on the likelihood of a trade deal.<\/strong><\/b>\u00a0While a further round of trade talks is scheduled for September, it seems increasingly likely that these talks will be abandoned.<\/p>\n

Goldman Sachs: No Trade Deal Until 2020<\/strong><\/b><\/h2>\n

In a research note released this week,\u00a0Goldman Sachs advised clients that it now no longer expected the US and China to deliver a trade deal before 2020.<\/strong><\/b><\/p>\n

In the note, the leading US investment bank said:<\/p>\n

\u201cWhile we had previously assumed that President Trump would see making a deal as more advantageous to his 2020 re-election prospects, we are now less con\ufb01dent that this is his view,\u201d<\/p>\n

Goldman Sachs: Fed to Cut Again<\/strong><\/b><\/h2>\n

Commenting on the implications of Fed monetary policy, the note said that the Fed was \u201cincreasingly responsive\u201d to trade war risks. It added:<\/p>\n

\u201cIn light of growing trade policy risks, market expectations for much deeper rate cuts, and an increase in global risk related to the possibility of a no-deal Brexit,\u00a0we now expect a third 25bp (basis point) rate cut in October, for a total of 75bp of cuts,\u201d<\/strong><\/b><\/p>\n

Technical Perspective<\/strong><\/b><\/h2>\n

For now, USDCNH remains near the middle of the range between the 7 level and the 7.1382 breakout highs. While above 7, focus remains on a further break higher though we are more likely to see a period of consolidation for now. Drifts back towards 7 should find buyers while any moves higher will likely meet offers into the new highs.<\/p>\n

By <\/strong>Orbex<\/strong><\/a><\/p>\n

 <\/p>\n","protected":false},"excerpt":{"rendered":"

By Orbex Treasury Statement Tensions between the US and China have continued to erupt this week. President Trump unexpectedly announced fresh 10% tariffs on a further $300 billion of Chinese goods, due to start September 1st. Following this, the US\u00a0Treasury has now labeled China as a \u201ccurrency manipulator\u201d. The accusation comes in the wake of […]<\/p>\n","protected":false},"author":3,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[],"tags":[],"class_list":["post-153032","post","type-post","status-publish","format-standard","hentry","no-post-thumbnail"],"_links":{"self":[{"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/posts\/153032","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/users\/3"}],"replies":[{"embeddable":true,"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/comments?post=153032"}],"version-history":[{"count":2,"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/posts\/153032\/revisions"}],"predecessor-version":[{"id":153040,"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/posts\/153032\/revisions\/153040"}],"wp:attachment":[{"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/media?parent=153032"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/categories?post=153032"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/tags?post=153032"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}