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Are the US-China Trade Wars Coming to an End or Is Trump Preparing for More Conflict?

May 08, 2019
BY Emma Richards

We’re sure you’ve heard about the ongoing trade wars between America and China, but have you ever wondered just how much has the squabbling between US President Trump and Chinese President Xi Jinping has affected USD against its trading counterparts?

Despite the rumors that Trump is preparing for a new assault on China’s exports, the mainstream news channels in the US and China are saying that the conflict is coming to an end. So what’s true, and what should you expect in the coming days and weeks? Here’s the latest news and speculation.

What China is accepting

Can China make a global expansion without loosening its hold on nationalistic restrictions?

Trump’s trade war tariffs started the international tit for tat in 2018, which then provoked China to set harsh tariffs on US goods. Neither nation could gain ground in the negotiations and the impasse that followed created troubling effects that echoed around the globe. This political posturing may have finally taken its toll on the eastern export giant, seemingly forcing China to reconsider US soybean imports and technological transfers from the US.

China is also reconsidering its current restrictions on US companies that wish to operate without Chinese joint venture partners, which could open the doors to a corporate invasion from the west. Trump has also gained ground in the energy sectors along with intellectual property protection.

What the US is accepting

China’s growth continues to slow, and national debt is on the rise; so it seems—for now—that Trump has the upper hand.

The US is set to officially accept China’s prevention of Chinese consumer data being stored outside of China. This means American and other non-Chinese companies will be at a huge disadvantage when it comes to marketing global goods and technology in and out of China—including those related to recent advances in artificial intelligence. The US’ acceptance comes as a surprise to many analysts as it may well ensure communist China’s continued restrictions on international commerce for the foreseeable future.

What to expect from USD

While the rest of the world would probably welcome advances that might end the trade wars permanently, many are now saying the current negotiations are just a prelude to Trump’s next big move against China. What that might be is subject to heavy speculation, but you can be sure it won’t be good for China and will likely provoke a fiery response. So how will traders trade USD in the coming weeks?

Political announcements don’t always have a dramatic effect on major currencies such as USD, and the Chinese currencies have a slower reaction time than their western counterparts, so caution is advised for now. Consider using technical analysis as the primary forecasting tool in the coming weeks and avoid trading immediately after political announcements… just to be sure!

Follow USD and its currency pairs, and get ready for the next rally or crash.

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