The dollar still holds, but everything has a limit
The growth of the dollar during the US trade wars looks rather strange. Yes, supporting and protecting national producers (the main goal of these wars) is a good thing, but the negative effects can far exceed this positive.
Recall, last Friday, new tariffs against Chinese goods totaled $ 34 billion were incorporated. China, as warned, introduced reciprocal mirror tariffs. Trump in response threatened to expand the list of Chinese goods to a total of $ 250 billion. This is a very serious figure even for the two largest economies of the world. Approximately at this point in the development of events, we are now.
Since the results of such actions by the US and China have global consequences, analysts of leading investment banks decided to calculate possible losses. The results are more than depressing.
According to J.P Morgan estimates, exports from China to the US may decline by 8.6%, which will reduce the growth rate of China's GDP by 0.2%. In addition, the bank's experts also note indirect influence in the form of a negative reaction of the labor market, consumption and the decline of business confidence. Among the victims, of course, will be not only China, but also the United States, and the entire global economy.
Analysts from Morgan Stanley believe that expanding the list of goods to $ 250 billion is fraught with a loss of 0.3% of GDP growth. At the same time, the US will lose from 0.3% to 0.4% of GDP growth.
According to HSBC analysts, the trade war will cost China 0.4% of GDP growth. And Deutsche Bank estimated China's losses in 0.3% of GDP.
As a result, the European Commission in the light of current events has already lowered the forecasts for the growth rates in the Eurozone.
As you can see, the losses are more than serious. And experts at the same time forecast not the growth of US GDP because of the increase in domestic production, but on the contrary the slowdown in growth due to more than serious losses in the component of foreign trade, as well as the potential growth of logistics costs, labor market losses, and decrease in business confidence. Obviously, this is not a positive signal for the dollar.
In total, we continue to hold the opinion that the current dollar prices are a good opportunity for its sales. At least until the situation with trade wars develops as it develops. And the very fact of the approach of the Dollar Index to the key resistance of 95.00-95.30 is an excellent occasion for its sales.
Recall, last Friday, new tariffs against Chinese goods totaled $ 34 billion were incorporated. China, as warned, introduced reciprocal mirror tariffs. Trump in response threatened to expand the list of Chinese goods to a total of $ 250 billion. This is a very serious figure even for the two largest economies of the world. Approximately at this point in the development of events, we are now.
Since the results of such actions by the US and China have global consequences, analysts of leading investment banks decided to calculate possible losses. The results are more than depressing.
According to J.P Morgan estimates, exports from China to the US may decline by 8.6%, which will reduce the growth rate of China's GDP by 0.2%. In addition, the bank's experts also note indirect influence in the form of a negative reaction of the labor market, consumption and the decline of business confidence. Among the victims, of course, will be not only China, but also the United States, and the entire global economy.
Analysts from Morgan Stanley believe that expanding the list of goods to $ 250 billion is fraught with a loss of 0.3% of GDP growth. At the same time, the US will lose from 0.3% to 0.4% of GDP growth.
According to HSBC analysts, the trade war will cost China 0.4% of GDP growth. And Deutsche Bank estimated China's losses in 0.3% of GDP.
As a result, the European Commission in the light of current events has already lowered the forecasts for the growth rates in the Eurozone.
As you can see, the losses are more than serious. And experts at the same time forecast not the growth of US GDP because of the increase in domestic production, but on the contrary the slowdown in growth due to more than serious losses in the component of foreign trade, as well as the potential growth of logistics costs, labor market losses, and decrease in business confidence. Obviously, this is not a positive signal for the dollar.
In total, we continue to hold the opinion that the current dollar prices are a good opportunity for its sales. At least until the situation with trade wars develops as it develops. And the very fact of the approach of the Dollar Index to the key resistance of 95.00-95.30 is an excellent occasion for its sales.
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