(Yahoo Finance) Fears of a looming trade war between the U.S. and China are paradoxically helping to increase the value of the U.S. dollar in global currency markets, analysts say, potentially undercutting a Trump administration policy goal.
Market analysts said they don’t expect the dollar’s strength to continue, though, because at some point the safe-haven appeal of the dollar will start to wane and worries about the state of a synchronized global growth story will weigh on it. Additionally, traders said they don’t think Trump can continue his battle with China because of U.S. election realities.
“The president wants to be in a strong position, look strong, act strong and show no signs of weakness, but at the end of the day he faces an election and that’s not the case in China,” said John Doyle, director of markets at Monex Inc in Washington. “These kinds of trade wars do play out over a long period of time, and the collateral damage in all this will be the American consumer. That’s not China’s problem.”
Earlier this year, the Chinese Communist Party rolled back its two-term presidential limit, clearing the way for President Xi Jinping to lead the nation for as long as he chooses.
“If you roll this out over the next year, year and a half, someone’s going to have to blink,” Doyle said, “and it might have to be the United States because our political realities are different than theirs.”
