China Fallout, Fed’s Trade War Reaction, German Woe: Eco Day

(Bloomberg) -- Good morning Americas. Here’s the latest news and analysis from Bloomberg Economics to help get your Tuesday started:

• China took steps to limit weakness in the yuan providing some stability to global financial markets in the wake of Monday’s rout, and said it won’t depreciate the currency to be competitive
• Hours earlier the Trump administration formally labeled China a currency manipulator, further escalating the trade war. It’s about five years late on the designation, writes Tom Orlik
  • Chinese state media stuck to the government’s line on the yuan’s weakening, saying the move was normal while stressing the economic benefit of some flexibility in the currency
• The latest U.S.-China salvos open up a new front the world’s central banks must contend with: a currency war
• The Fed will be leaning closer to reducing rates again next month after President Donald Trump ratcheted up his trade war
  • Meanwhile economists at Goldman Sachs Group Inc see three cuts this year amid surging trade tensions and the increased prospects of a hard Brexit
• Four former Federal Reserve chiefs made a joint plea for the central bank to be able to operate without political pressures or the threat of removal of its leaders
• A rebound in German factory orders in June might be as good as the news gets this week from Europe’s largest economy
• Meanwhile a key measure of Japan’s economy fell to a level not seen since the wake of the financial crisis, adding to concerns about the economy ahead of an October sales-tax hike
• Desperate Britain has no leverage for a trade deal with America, according to former U.S. Treasury Secretary Lawrence Summers
  • Away from Brexit, Boris Johnson’s government has just been presented with a novel idea for the next head of the Bank of England: pick a woman
• Australia kept interest rates unchanged Tuesday following back-to-back cuts that, combined with a massive escalation in the U.S.-China economic battle, helped push the currency to its lowest level in a decade

To contact the reporter on this story: David Goodman in London at dgoodman28@bloomberg.net

To contact the editors responsible for this story: Paul Gordon at pgordon6@bloomberg.net, Zoe Schneeweiss

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