Currently, the financial markets are experiencing a lot of stress and risk aversion. This is due to the deterioration of the trade talks between the United States and China, as well as the increasing likelihood of a hard Brexit. Just yesterday it became known the the UK Prime Minister Boris Johnson is trying to limit Parliament’s power to stop his plans by giving them a longer vacation than needed.
As a result, the Japanese yen has strengthened significantly. It appreciated against the dollar, with the USD/JPY reaching 105.90 overnight. The Australian and New Zealand dollar also dropped against the yen.
At the end of this week, the most recently announced trade tariffs will hit Chinese goods coming to the United States. American businesses are beginning to warn the public about their difficulties and the need to raise prices in order to keep up with the higher production costs.
Meanwhile, Chinese officials have stated that they hope trade talks can restart in September. However, they want the United States to be more accommodating by getting rid of the latest tariffs. It’s not clear whether China will negotiate at all if the tariffs are not canceled.
