Dollar falls as Trump accuses ‘China, European Union of currency manipulation

The US launches a trade war against China

European auto shares, sensitive to trade tensions as USA officials work toward slapping tariffs on vehicle imports, fell 2.1 percent.

The dollar had reached that high after Federal Reserve Chairman Jerome Powell expressed confidence in the US economy and affirmed expectations that the central bank was on track to keep hiking interest rates gradually.

The China Global Television Network has released a video to address the tariffs imposed on American soybean exports. Earlier this year, he used national security as a justification for taxing imported steel and aluminum.

Europe's STOXX 600 fell 0.3 percent as investors braced for a packed week of corporate earnings in Europe and a meeting between European Commissioner Jean-Claude Juncker and Trump to discuss threatened auto tariffs which could damage carmakers.

It is not the first time soybeans have had a starring role in Beijing's trade showdown with Washington. Yao Dandan said his company has sold around 50,000 "Trump flags" in 2018 and consistently receives orders.

"The US is likely to continue to take measures against its trading partners until the equity markets respond or there is a dip in the president's approval rating", say Aditya Bhave, Ethan Harris and Helen Qiao, economists at BAML.

The biggest fallers today have been the automakers with Volkswagen and BMW sharply lower, but the losses have also pulled in BASF, Siemens as well as Deutsche Bank, while on the FTSE100 the worst fallers have been in basic resources and industrials with CRH, Melrose and BHP Billiton all near the bottom of the index. -Chinese tariff fight that prompted suggestions Beijing might weaken the yuan to help exporters. It expects that 700,000 jobs would be lost.

But trade tensions are escalating anyway.

China's government put out a video featuring a soybean, seemingly pushing against Trump's trade policies.

He and Utah Republican Gov. Gary Herbert extolled long-term strategies for state economies to increase foreign trade, from foreign language schools to Utah's expansion of airport cargo-flight capacity.

But many analysts are skeptical that President Trump's tactics will produce such an outcome.

And while the currency has been weakening in recent weeks, Mr Nordvig said Thursday's sharp adjustment appeared to be a deliberate move.

China has pledged to retaliate against USA tariffs in "equal scale and equal strength".

To some extent that policy lost a lot of its credibility in the reaction to the financial crisis, post 2008, and while USA officials have never explicitly acknowledged a desire so openly for a weaker United States dollar in the past they have also never really complained about a strong currency until recently.

"Lastly, a weaker yuan deepens trade war concerns". China also said it would reduce its auto tariffs from 25 percent to 15 percent.

Yet President Trump soon intensified his tariff threats anyway.

The CBN asked banks to bid for renminbi between 9:00 a.m. and midday, two people, who asked not to be identified because they're not authorized to speak to the press about the matter, said.

A top Federal Reserve official, meanwhile, warned the trade war could hurt the us economy. Yet any such agreement would require extensive talks over how it would be implemented and verified. "I don't like all of this work that we're putting into the economy and then I see rates going up".

In the CNBC interview broadcast Friday, Trump reiterated his claim that the United States is "being taken advantage of" on issues including trade policy.

"They're not doing what we're doing and we already have somewhat of a disadvantage, although I'm turning that into an advantage", he said. He has been denouncing other countries' trade practices and urging retaliation for decades, dating to the 1980s, when Japan was regarded as America's main global economic threat.

"If there's a toss-up between raising and not raising (rates), you wonder what role these types of comments might possibly play", said Sameer Samana, a strategist for the Wells Fargo Investment Institute.

In his CNBC interview Friday, President Trump shrugged off the prospect that a trade war with China could cause the stock market to tumble.

"If it does, it does", he said.

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