MUFG Research discusses the USD tactical outlook amid the recent heightened US-China trade tensions.
"One of the key developments yesterday was a report indicating that a diplomatic cable from China had arrived last week Friday with significant edits on key points of the current 150 page trade agreement proposal. In particular this relates to “reneging” on commitments to changing laws pertaining to forced technology transfers, theft of US intellectual property and trade secrets, and currency manipulation among others. This move could suggest a more aggressive negotiating stance adopted by China, to some extent driven by a positive turnout at a conference on the Belt and Road Initiative in the last week of April," MUFG notes.
"It’s beginning to look like the market could be mispricing worsening US-China trade tensions, which suggests potential dollar upside in the coming weeks, MUFG adds.