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Dollar weaker as trade tensions escalate

US prosecutors have launched criminal charges against Huawei, China’s largest smartphone manufacturer. The news is breaking as Asia Pacific markets are opening, and may refocus attention on the China / US trade dispute after the re-opening of the US government.  The US dollar is under renewed pressure, and local investor sentiment could be bound between cautious and sour.  A huge week of data and events ahead may be a restraining factor.

Industrial metals and energy prices slumped overnight after China reported a second month of contraction in corporate profits. In turn this saw share investors head for the exits across Europe and the US. Futures markets are pointing to lower openings across the region, although lower local currencies may prove supportive. Gold spiked over $1,300 an ounce, but bonds rallied modestly.

The US is in the spotlight this week. Around 120 of the top 500 companies will report, the US Federal Reserve meets and will make an interest decision on Thursday, and various agencies will release data delayed by the government closure. Among the numbers the PCE read on inflation will draw attention for its ability to influence Fed action, and non-farm payrolls on Friday night with accompanying wage data will speak directly to US economic health.

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