Ongoing trade war tensions has mean that the USD was lower on Wednesday 19th September when compared to other currencies. The U.S. Dollar Index measures the dollars’ worth against other currencies, and reported a fall from 0.17% to 94.06, which was recorded at 11.45 a.m. (ET)
The currency news comes as discussions with Canada regarding NAFTA have reported as slow and tense, as the window for an agreement to be put in place becomes smaller.
Canadian Prime Minister Justin Trudeau states they have been clear in relation to expectations and will need to see a great deal of movement from the US for a deal to be put in place.
NAFTA is an acronym for the North American Free Trade Agreement, which is signed by Mexico, Canada and the United States and allows the three countries to be part of a treaty that eliminated tariffs, therefore increasing the investment opportunities available.
Canada is keen to be recognised as a trading partner and wants to be protected against high tariffs.
China’s Response to New Trade Tariffs
As well as Canada searching for a more viable trading deal, China has also hit back at the US following a declaration that the 10% tariff on goods of $200 billion, which will rise to 25% by the end of the year.
China has stated that new there will be new trade tariffs on $60 billion of US goods, with items like liquefied gas being In China’s states.
However, a tweet from Donald Trump stated that should China home in on farmers on industrial workers, the could potentially face a retaliation.
Other planned duties by China include 5% for computers, small aircraft and textiles, while meat, wine will incur 10%.
The tariffs are reported to take effect from 24th September 2018, the same date the new US duties come into place.
The planned US duties will apply to around 6,00 items and will items such as rice and handbag. However. There are some exemptions in place, such as smartwatches. The latest round of tariffs, which range from 10 to 25% are Trump’s response to what he calls “unfair trade practices.”
Much like the pound sterling forecast, it’s difficult to know how USD will fare moving as it will depend on the trade deals agreed.
Exchange rates have had a similar effect on the GBP, which although saw a temporary rise, only for pound sterling to fall again regarding the ongoing debate between the EU and UK in relation to the Irish Border.
Of course, there can be other unforeseen factors to consider when looking at a pound sterling forecast, or any other form of currency. Suffices to say that where there is uncertainty in relation to the future of trade, it won’t be unusual to see exchange rates fluctuate in line with future forecasts.
