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Apr 9, 2018

The Wall Street Journal | MoneyBeat: A Trade Wr Could Add to the Dollar's Woes on April 9, 2018.

The Wall Street Journal

A Trade War Could Add to the Dollar’s Woes

By Chelsey Dulaney
Morning MoneyBeat is the Journal’s pre-market primer. To receive the newsletter via email, click here.
Market Snap at 04/09/2018 07:36:44 AM ET
S&P 500 Futures 0.59%
DJIA Futures 0.69%
U.S. 10 Year -7/32
WSJ Dollar Index 0.11%
Crude Oil 0.4%
Gold -0.37%
FTSE 100 -0.13%
Nikkei 225 0.51%
DAX 0.52%
Hang Seng 1.29%
CAC 40 0.26%
Shanghai 0.23%

Overnight Developments

  • Global stock markets advanced after Trump administration officials on Sunday softened some of their rhetoric on trade. S&P 500 futures pointed to an opening gain of 0.5%.
  • The Stoxx Europe 600 edged up by 0.2%
  • Hong Kong’s Hang Seng Index earlier closed 1.3% higher, while Japan’s Nikkei rose 0.5% and South Korea’s Kospi rose 0.6%.
  • The Breakfast Briefing

    The beleaguered U.S. dollar won’t get much help from a trade war between the U.S. and China.
    The greenback has already fallen 2.3% against a basket of peers tracked by The Wall Street Journal this year. It fell another 0.2% on Friday as investors fretted over rising trade tensions between the world’s two biggest economies and U.S. hiring data that came in below expectations.
    The U.S. and China have both proposed tariffs on billions of dollars in each other's goods in recent weeks. After the U.S. threatened to triple the value of Chinese imports it imposes tariffs on to $150 billion, China vowed to strike back “forcefully.”
    U.S. Treasury Secretary Steven Mnuchin warned Friday that there is “the potential of a trade war,” helping spark a steep stock-market selloff that also dragged the U.S. currency down.
    Analysts at UBS say that while trade tensions could send the U.S. dollar higher against some export-dependent emerging-market currencies, the dollar is unlikely to gain much against peers like the euro or Japanese yen. The dollar fell 0.3% against the euro Friday and 0.4% against the Japanese yen.
    That's because increasingly protectionist U.S. trade policy could lead other countries to slap tariffs on American exports, reducing demand for those goods--and thus the dollar.
    Trade tensions and their potential U.S. economic impact could also keep the Federal Reserve from tightening policy, another negative for the greenback as lower rates can make domestic assets less attractive to yield-seeking investors.
    On Friday, investors saw a 24% chance that the Fed would deliver two or more additional rate-increases this year, down from 33% a day earlier, according to CME Group data.
    For its part, the Trump administration probably wouldn’t mind more dollar weakness. After all, a weaker dollar makes exports look more attractive, which could counteract any drop-off in demand for American goods due to more restrictive trade. In the past, administration officials have described the dollar's weakness as “good for trade.”
    How will trade tensions impact the dollar? Let the author know your thoughts at

    Key Events

    There are no key events today.

    Stocks to Watch

    Deutsche Bank—Up 4.1%: Germany’s biggest bank replaced its chief executive John Cryan with the senior head of its retail bank, Christian Sewing.
    Caterpillar—Up 0.8%: The manufacturing giant was the Dow industrial's biggest loser Friday, sliding 3.5% as investors worry about how escalating trade tensions between the U.S and China will impact the company.
    Boeing—Up 0.9%: Shares of the aviation giant have been under pressure as global trade tensions mount and China moves to impose tariffs on a type of jet that the company produces. Boeing shares are down 6.5% over the past month.
    PayPal Holdings—Up 0.8%: Shares of the company slid Friday after The Wall Street Journal reported Inc. is considering starting a person-to-person payments feature that would compete with PayPal's Venmo service. Square Inc., which also offers payment services, was up 1.7% in pre-market trade.

    Number of the Day

    The Dow industrials fell 572 points on Friday as growing tensions between the U.S. and China exacerbated investors’ fears of an all-out trade war between the world’s two largest economies.

    Must Reads

    Cracks Form in Global Growth Story, Rattling Investors: Stock-market investors, already grappling with the tech rout and the threat of a trade war, are starting to reassess a fundamental premise of the powerful rally.
    Mark Zuckerberg’s Mission: Stay Cool in a Very Hot Seat: Facebook CEO Mark Zuckerberg faces lawmakers this week in what are likely to be contentious hearings about privacy that will be a broader test of how effectively he can guide his social-media giant.
    Europe’s Boom Reawakens the Ghost of Crisis Past: Debt: Economic optimism, ultralow interest rates and fierce banking competition have pushed private-sector lending to its highest level since the financial crisis. That would be good news if it wasn’t for the region’s already high debt.
    Alibaba Invests in Chinese Facial-Recognition Startup: Chinese e-commerce giant Alibaba is leading a $600 million funding round in SenseTime, which makes surveillance systems using facial recognition for law enforcement and commercial applications.
    Americans Face Highest Pump Prices in Years: Gas prices could rise even higher just as drivers hit the road for family vacations.
    The Architect of Trump’s Threatened China Trade War: U.S. Trade Rep Bob Lighthizer argued that years of negotiation with Beijing had produced little and now the time had come for a confrontational approach.

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