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Why the USA vs China Trade War Matters for Forex?


It is hard not to see the importance of the USA in the world economy since the Second World War. But, recently, we could see China, another giant country, becoming fundamental to the international economy.

Both, China and The USA, started in 2018 an international dispute over foreign commerce, and it can direct affect Forex.

The trade balance favors China over US in more than $600 billion dollars in 2018 and 2019. After “a 14.1% jump over 2017, leaving the deficit over the US president Trump’s first term much higher than the one he inherited from his predecessor” The Guardian.

It means that President Trump will probably promise to get even harder to close the gap between China in foreign trade. They recently signed the first phase of an agreement to rebalance their flux of goods.

What is the US position in the Trade War?

Since Trump’s been elected as President of The United States, he turns around the way his country faces international commerce. He tries to stimulate investments back to American soil and strongly attacks all competitors of American companies.

In his running to get a second term, he will probably go further in creating problems to those who he thinks are the “enemies” of America. This could cause the Forex linked to it to be affected by the rise in the dollar.

How China is positioned in the Trade War?

China is a huge commodity consumer and has an important role in technological market, specially in telecommunication. For example, the 5G mobile Internet technology.

They are invested efficiently in solar electrical power, on improving the quality of their products and to do researches and developments within Chinese soil.

Those are some of the reasons by why they became important partners of major economies in Europe, America and Asia.

China can be more careful in the Trading-War, because of its huge internal market, that started recently to consume more added value products. It probably means it will grant some benefits to US in the short term.

What are the principal implications to Forex Market?

We frequently remark the US importance over Forex market. For example: Pointing out who are the most influential guys on Forex. So, we are be able to see a more incisive speech coming from American authorities. It can impact Forex Pairs linked to the USD.

Chinese currency are not directly relevant to Forex market, but China is a very important consumer of commodities and industrial products. Therefore if it has to slow down their rhythm of consuming.

It will directly affect Forex Pairs related to commodities and currencies of their principal partners.

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Takeaways

  • The Trading-War between US and China is very relevant to the Forex market, as they are the two major economies nowadays.
  • We will probably see China becoming the biggest economy in the world in the next Ten years.
  • In the short-term the Trading-War will be beneficial to US economy.

It is difficult to fight against the inevitable, and history shows that inevitably empires always fall.

Why the USA vs China Trade War Matters for Forex? Did you like what you read? It is very interesting to read about Forex by learning a little about history, isn’t it? See more at Wiseinvest.ai/education.

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