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The US has now announced a further USD200bn worth of 10% tariffs on China, escalating trade tensions further, notes the research team at Rabobank.

Key Quotes

“China has promised to respond, but cannot do so on goods alone given its relatively smaller import bill.”

“The market is continuing to see recent weakness as just ‘catch up’ rather than an FX war.”

“However, that could still change as trade wars get worse, the Fed hikes, and China slows.”