Dollar Falls on Worry of Damaged Trade Relations with China

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Dollar Falls on Worry of Damaged Trade Relations with China

Dollar falls sharply today after news that US will file complaints to WTO against China, trying to reduce piracy of copyrighted intellectual properties including movies, music, software and books. The complaints, if filed, will trigger a 60 day consultation period during which trade negotiators from US and China will try to find a resolution. But if that fails, WTO hearing panels will be convened and if US wins the cases, it will be allowed to impose penalty economic sanctions on Chinese products. Chinese Ministry of Commerce Wang Xinpei responded by saying that "China very much regrets the decision and is strongly displeased", and such complaint will "severely damage" trade relations. With US breaking a two decades long practice and imposed penalty tariffs on Chinese glossy paper imports last month, today's news raises concern that the trade relationship between US and China will further deteriorate which would eventually hurt both economy as well as global growth. There are additional pressure on dollar after Shanghai Securities News reported that China's new forex investment company is unlikely to invest heavily in US Treasuries and will turn to other investments instead for higher yield
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