Stocks waver, dollar slips as traders shrug off trade talk

Chinese yuan

Auto tariffs would escalate global trade tension dramatically: The U.S. last year imported $192 billion in vehicles and $143 billion in auto parts - figures that dwarf last year's $29 billion in steel and $23 billion in aluminum imports.

After overseeing a slide in the yuan of nearly 5 per cent since mid-June, the question for Chinese officials now is whether to turn to other policy measures to support growth in the face of headwinds to exports.

"Analysts said the yuan's latest dip came after China's central bank indicated that it was willing to accept a weaker currency", CNN reports, as it will help China's huge export industry cope with new USA tariffs. The central bank says it bases the yuan's exchange rate on a basket of currencies but has never released details. More than 70 per cent of Republican and Republican-leaning U.S. adults believe increased tariffs between the United States and its trading partners will be good for the country, according to a Pew Research Centre survey.

Jasper Lawler, head of research at London Capital Group, called China's lowering of the trading band "the starting of a currency war" in response to the trade war.

Currency wars occur when a number of countries seek to depreciate the value of their own currencies in order to stimulate their economies, Investopedia writes. A strong currency tends to make a country´s exports more expensive.

Officials from the EU Trade Commission, due to arrive in Washington next week for trade talks, are said to be preparing a list of tit-for-tat actions in response to proposed USA tariffs on EU cars. "In China their currency is dropping like a rock and our currency is going up, and I have to tell you it puts us at a disadvantage".

Merkel warned that the imposition of such tariffs by the USA constituted a "real threat to the prosperity of many in the world", "Efe" news reported. That could in turn boost an economy that posted its slowest growth rate in almost two years - 6.7% - in the second quarter.

His administration is considering tariffs of as much as 20% on United States automobile imports from Europe.

More news: A Look at How France Clinched Its Third World Cup Final Appearance

However, it is a high-risk strategy.

His comments did not help to push the dollar down considerably versus the yuan, however.

The report rekindled anxieties about global monetary policy easing and piled further pressure on investors already struggling to navigate rising protectionism and tense geopolitics.

YUAN DECLINES: The People's Bank of China weakened the country's currency against the dollar on Friday.

Trump criticized the Fed twice, first saying on Thursday, "I am not happy about it".

In this sense, rather than closing American doors to China at a time when China is inviting the world's goods and capital into its substantial and expanding domestic market, Trump could opt for a strategy whereby new deals are cut allowing for the dropping of USA tariffs on Chinese imports while garnering specific agreements from Beijing to allow more United States goods than ever before to be sold on the Chinese market.

He had told CNBC that he was "not thrilled" that the US central bank is raising interest rates as the economy improves, and in his tweet repeated his claim that the Fed is undoing the economic progress the country has seen during his presidency.

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