Tougher Talk on Tariffs Risks Fueling Market Volatility

Investors are doing their best to focus on record second-quarter earnings while letting the war on trade play itself out in the financial media.

It is tough when Microsoft reports five-star results and has almost no impact on the well-being of the broader tech sector. There is a general feeling of broad support for bringing China and other nations in line to fairer trade relationships, but it is becoming clear that this situation could play out over several months, even though the market and investors much prefer a quick fix.

Apparently, China’s President Xi Jinping has no interest in talking fair trade with the United States anytime soon. Per the latest reports on the tit-for-tat tariff dispute, U.S. and China trade officials have taken a pause on further negotiations, having hit an impasse. The Chinese central bank is manipulating the yuan lower to make its goods more attractive to other countries for export and to fatten profits for exporting companies, while the U.S. Dollar Index (DXY) powers higher to a new 52-week high of 95.65 against the yuan and other major currencies.

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