The US dollar hits an 11-month high as US-China trade dispute heats up

Nicolas Asfouri / Getty ImagesChina’s President Xi Jinping and US President Donald Trump.

The US dollar rallied to an 11-month high against a basket of peers Tuesday as trade tensions between the US and China soared, pushing markets to poise for faster inflation and a more hawkish Federal Reserve.

The greenback was up 0.37% on the US dollar index to 95.11 at 10 a.m. ET. The currency had earlier risen as much as a half a per cent to 95.30, a peak not seen since July 2017.

President Donald Trump said this week his administration could slap as tariffs on $US200 billion worth of Chinese goods, in addition to levies on $US50 billion imposed against Beijing last week, and said that amount could double if Beijing retaliated.

The Chinese Commerce Ministry said Tuesday it was prepared to hit back with “comprehensive measures that match the US move in quantity and quality.”

The idea of hefty import taxes on goods from the world’s largest economies seems to be stoking inflation concerns. The Federal Reserve last week raised its key rate by 25 basis points and signalled two more hikes this year, a greater amount than previously expected.

Lukman Otunuga, an analyst at FXTM, said the greenback will likely continue to “find ample support amongst the bullish sentiment towards the US economy and heightened expectations of higher US interest rates.”

The dollar is up 3.57% this year.

Screen Shot 2018 06 19 at 10.08.12 AMMarkets Insider

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