Global growth is cooling as the trade war continues to erode business investment, manufacturing activity, and investor confidence. In July, the Federal Reserve cut interest rates for the first time since 2008; the preemptive move came in response to weaker global expansion and muted inflation. In the midst of the trade battle between China and the United States, there has been market speculation that the U.S. government could intervene to weaken the dollar. The dollar has risen against a broad, trade-weighted basket of other currencies over the past year.
So, when China allowed the yuan to weaken past a key level, it didn't take long for the United States to designate China a currency manipulator, turning the duel between the two economic superpowers into a currency war. The fallout from the trade war and weakness in China has spread to the eurozone, including Germany, the region's largest economy. The European Central Bank (ECB) signaled that it will consider injecting more stimulus into the wobbling eurozone economy by cutting interest rates or restarting a bond-buying program.
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Global growth is cooling as the trade war continues to erode business investment, manufacturing activity, and investor confidence.