• US dollar drops against selection of other global currencies
  • China renews vow to retaliate if US imposes tariffs
  • Strong German industrial orders strengthen Euro

The US dollar dropped in value against a range of other global currencies yesterday. This was expected as the US plans to hit China with massive import tariffs today, which could give rise to a trade war that will most likely hurt the world economy.

The US dollar index, a measure of the dollar’s performance against six of the world’s biggest currencies, dropped to 94.09 (-0.11%) earlier.
Investors are still edgy about today’s deadline for the 25% tariff on Chinese imports worth $34bn, and the Chinese government has promised to match it in an eye-for-an-eye battle.

The latter’s commerce ministry said in a clear warning yesterday that the United States was “opening fire” on the international community and repeated that country’s promise to respond in kind.

When American markets opened again after the public holiday, investors started to focus on other issues, such as the US employment report that will be released today and the minutes of the June Fed meeting.

The USD was marginally higher against the Japanese Yen, with the USD/JPY rate creeping up by 0.12% to 110.64.

The Euro, meanwhile, strengthened by 0.29% to 1.1691, its highest level in three weeks. The currency received a boost from reports indicating that there was a strong recovery in German industrial orders in May, ending four consecutive months of decreases.

The Chinese Yuan traded in a narrow range after that country’s central bank’s promise earlier this week to keep its exchange rate stable.

The GBP increased marginally (0.13%) against the USD to 1.3243, but it dropped by 0.19% against the Euro to 0.8825.

The Australian Dollar moved mainly sideways, with the last available rate being 0.6382, while the NZD moved slightly higher to 0.6675.

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