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Trump’s trade war hits global growth

The US president’s protectionist trade policies target Japan while average hourly earnings data should shed more light on why wage growth has been so low.

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The global trade war went up a notch as US President Donald Trump put Japan on his target list. In a phone interview with The Wall Street Journal’s James Freeman, Trump suggested that the existing good relations with the Japanese “will end as soon as I tell them how much they have to pay”.

Fitch forecasts that any further escalation will cut global growth by 0.4 per cent. And the US would be hit the hardest, with the crediting ratings agency estimating the country’s GDP would fall by 1 per cent in 2020.

Amid the ongoing tariff rhetoric, Federal Reserve member John C. Williams said he didn’t see inflationary pressures and that he was puzzled by low wage growth. He also suggested that the Fed should not stall its interest rate plans in fear of inverting the yield curve in order to hit the central bank’s targets.

Finally, my focus today will shift to the US labour market and particularly the average hourly earnings. Economists expect 198,000 employees would have been added to the workforce and earnings would have risen by 2.7 per cent. If the figures show that salaries rose faster than expected, the Dollar will continue to strengthen.

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