US Dollar Maintains Steady Position Amid Ongoing China Trade War

We live in a world that is dominated by digitalisation and the ongoing exchange of power, each of which flourish and thrive not only individually, but in collaboration with one another. It  goes without saying that there is a constant influx of exchanges of power, happening around us all the time.
 
Take the current position of the US dollar in FOREX, for instance. As the most popular currency in the world, in addition to being the most popular reserve currency in use globally, the US dollar (also known as the “Greenback”, thanks to its colour) is the dominating currency in the global financial system. Even so, like any other currency that is operated and traded through FOREX, the US dollar is not immune to its own challenges and hurdles. One of its biggest challenges yet is currently ongoing, with many fearing for the position of the US dollar in FOREX as a result.
 
The ongoing trade war between the US and China has been in effect for quite some time. Current President Donald Trump has made matters increasingly worse throughout his troublesome (to put it mildly) presidency, to the point that the International Monetary Fund is estimating that this blowout has the potential to cost the global economy $700 billion in losses in 2020. To put that into perspective, that monumental loss is equivalent to the size of Switzerland’s entire economy. But where does this impact the US dollar, and is the impact indeed a negative one?
 
Here’s the thing. China has been in a powerful player in the US trade deficit. In fact, when Trump first became president, China had already overtaken Japan as the biggest contributor to the ongoing deficit. Now, China holds a 48% of total US trade deficit dwarfs, while Japan holds just 7.7%. The current US president has responded by “ordering” US companies to cease business in and with China, hiding under shaky at best cover of the International Emergency Economic Powers Act of 1977. This is where and why the US and China are currently engaged in a trade war for the ages.
 
So, naturally, there has been concern surrounding the position of the US dollar in FOREX. However, currently the US dollar remains in its strong position, and even the Chinese Yen has gone up in value a little bit. This is encouraging to see amid the ongoing controversy this week surrounding the fate of the US dollar going forward, but as for how long this position can be maintained, that is yet to be discovered. The nature of FOREX is that no currency, no matter how strong and for how long it has been in its current position, is that nothing is solidified – not even the position of the US dollar.