Trade war rumbles on as US markets celebrate July 4th

Clare MacCarthy

Senior Editor, Saxo Bank Group
Clare MacCarthy first joined Saxo Bank Group in 2012 to work as a senior editor on TradingFloor.com. Prior to this, she worked as a Denmark-based foreign correspondent for The Economist and the Financial Times and also served as Copenhagen bureau chief for Dow Jones Newswires.

US markets are closed to mark Independence Day but in the background, the drumbeat of global trade wars continues to rumble, undermining the yuan and Chinese equities, sparking fears of contagion across fixed income and dragging a major tech company onto the battlefield.

The Peoples Bank of China's intervention yesterday in support of its currency did slow down the yuan's decline but the market remains unnerved by the currency's prospects. "The signal is rather clear that the PBoC doesn't want to see a devaluation just yet," notes John J Hardy, Saxo's Head of FX Strategy.  

On the trade war front we have fresh news out of the EU that the bloc is trying to put together a coalition countries to counter president's Trump's threat of tariffs on motorcar imports to the US, and this, Hardy says, illustrates the vulnerability of the EU to Trump's trade crusade.

In equities, "we're still in a risk-off scenario even though Chinese equities are 1% lower" says Peter Garnry, Saxo's Head of Equity Strategy. 

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