On Thursday, the US dollar rebounded for a while in the Wall Street trade. Market participants are braced for a new round in the trade conflict between the US and China. Yesterday, Donald Trump indicated that he is ready to ramp up a trade war with China. Now he intends to impose more tariffs on Chinese imports worth $200 billion. Experts say that counter measures will follow from Beijing immediately. So, a new round of punitive tariffs is sure to trigger higher volatility on forex. Traders working with the greenback are developing a different strategy than previously. Amid concerns over escalating trade tensions, investors had to buy safe haven assets, including US Treasuries. This kept the US dollar higher. However, its index remains in a trading range between 94.50 and 94.80. Experts are certain that the greenback is on track to finish this trading week with losses against most rival currencies. The traditional safe haven asset, the Japanese yen, is taking advantage of the situation.
The USD/JPY pair again sank below 111.00. Interestingly, macroeconomic data from Japan today undershot forecasts and revealed an unexpected decline in industrial production and lower unemployment rate. Traders are closely monitoring statistics from China to assess the fallout from the US protectionist rhetoric towards China. Today, the official gauge of China's factory activity edged up to 51.3 in August. Analysts expected a minor drop to 51 points. Nevertheless, experts say that the trade war between the two largest global economies will inevitably cause the aftermath. Meanwhile, the currency market mirrors the developments of the trade conflict. The AUD/USD pair closed the Asia-Pacific session in the red. The currency pair declined below 0.7250. The standoff between China and the US will hardly be settled at once. In the context of persistent trade jitters, safe haven assets will enjoy strong demand in the short-term.