Talking Points:
- After a reprieve yesterday, US-China trade war concerns are materializing again after the latest Chinese trade balance report showed that its surplus with the US widened; USD/CNH[1] was back near its highest close of 2018.
- US President Trump's comments on the state of Brexit have rekindled concerns about the viability of the Theresa May government; GBP/USD[2] is at its lowest level since July 3.
- Sentiment for the US Dollar[3] continues to suggest a neutral outlook after recent price developments.
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The US Dollar (via the DXY[5] Index) is pacing to gain everyday this week and due to post its first string of five consecutive up days since May 14 to 18. With trade concerns have been seemingly ebbing and flowing every day in recent memory, attention remains focused on any new developments on the US-China trade war front.
The offshore Chinese Yuan is weakening once again as market participants are divining the next move's in the US-China trade war based on recent trade data. While some of the growth figures from the world's second largest economy have been less than impressive recently, what has stood out is the fact that China's trade surplus with the United States just grew to a new record surplus.
Given that US President Trump has turned his attention to countries that enjoy trade surpluses with the United States - Canada, China, Germany, Japan, among others - it would be logical to suggest the latest Chinese trade figures will not help ease tensions any further. Instead,
