Trade tensions rising to new levels dominated Friday’s price action as a Trump interview with Bloomberg further aggravated the trade outlook.
Amongst his inflammatory comments, Trump threatened to pull out of the World Trade Organisation, stating that the agreement to establish the WTO “was the single worst trade deal ever made.” Trump feels that the US is treated unfairly by the WTO, losing many of its cases via the current despite the system.
Roberto Azevedo, the WTO’s director general responded by warning that such a move would cause chaos for US companies operating around the world and the global economy.
Trump was also on the attack against the EU – rejecting the European Union’s offer to scrap tariffs on cars, likening the bloc’s policies to those of China.
On China, Trump declared that the US will outlast China in their trade dispute – perhaps hinting that an additional $200 billion in tariffs will be announced later this week. The Chinese currency was also squarely in Trump’s sights – confirming that the US administration is committed to re-examining how to determine whether countries are manipulating their currencies.
The interview and ongoing emerging markets concerns fuelled a broad-based risk-off environment with the Australia dollar the hardest hit, falling through 72 US cents.