CNY

Looking at the currencies this morning, the Chinese Yuan takes center stage as the People’s Bank of China sets the official rate below 7.000 for the second day. China allows the Yuan to trade within a 2% range of the fixing price. The US has accused the Chinese of manipulating their currency for trade purposes and this has been a major point of the trade war between the two countries. After President Trump added new tariffs on China last week, the Chinese let the Yuan weaken above the 7.0000 which has brought disruption to the equity markets around the world.

JPY

USD/JPY once again is under pressure as traders look at this JPY as well as the CHF as safe haven purchases in times of international turmoil. JPY will remain a focal point among currencies as long as the tension between the US and China continues.

GBP

The British pound did alright on Tuesday though. Its only loss was two thirds of a yen, 0.5%. Sterling was flat against the euro and slightly ahead of the US dollar, with an average daily gain of 0.5%.

EUR

EUR tries to rally but can’t seem to hold onto gains and looks to move lower as we move through the week. This morning brought news of more industrial gloom from Germany, with production falling 1.5% in June.

USD

DOW Futures are trading lower this morning so the US equity markets could be under pressure at their opening later today. The markets have moved back and forth depending on whatever developments happen regarding the trade war. US Treasury yields are lower as well, with the 10-year note trading below the 1.7000 level at 1.6869% and the 30-year bond trading at 2.2164%. The 10-year note influences mortgage rates in the United States and is at its lowest level since November 2018.

It’s hard to say who is winning this trade war. US tariffs are met by China letting the Yuan weaken. China cancels its buying orders of US soybeans, which hurts the US farming industry as China is the fourth largest buyer of US goods. This is certainly going to become a political issue moving forward.