Stocks rebounded on Tuesday after China’s central bank indicated it wanted its currency to trade at a higher level than expected against the dollar, easing tensions about the nation using its currency as a weapon in the trade war… Overnight, China’s central bank set the yuan’s official reference point at stronger than the key 7 yuan-to-the-dollar point on Tuesday. The move calmed currency markets, initially rocked by fears the U.S.-China trade war was devolving into a currency war.
Shares of companies whose future prospects hang in the balance because of the trade war led the rebound in early trading. Caterpillar, Apple and Micron all traded higher.
On Monday, the Treasury Department designated China a currency manipulator, a move that has not been seen since the Clinton administration. Beforehand, Trump took to Twitter to voice his opinion on the currency move.
China dropped the price of their currency to an almost a historic low. It’s called “currency manipulation.” Are you listening Federal Reserve? This is a major violation which will greatly weaken China over time!
— Donald J. Trump (@realDonaldTrump) August 5, 2019
National Economic Council Director Larry Kudlow told CNBC’s Squawk on the Street on Tuesday that Trump was still open to a trade deal between the U.S. and China that would lead to flexibility on tariffs. “The reality is we would like to negotiate,” Kudlow said during a live interview. “We’re planning for the Chinese team to come here in September. Things could change with respect to the tariffs.”
MacDailyNews Take: As we wrote during yesterday’s wild drop, “it’s good to rememeber that it’s always darkest before the dawn.”