FX Daily: Rare Earth Exports and Trade
China's rare earth export controls have become a key factor in determining risk appetite over the next four weeks.
The FX markets are currently calm, but attention is focused on China's export controls on rare earths, which have caused concern in the US and G7 nations.
- The ability to negotiate these controls will be a major topic in financial markets over the next four weeks.
- The dollar is slightly weaker, with short-dated US rates at their lowest for the year.
The decision to impose such controls has clearly touched a nerve in the US and across G7 nations.
The Fed's Beige Book release suggests that the Fed will have enough evidence to cut rates by the end of the month, despite the government shutdown.
Betting markets expect the government to remain closed into November, with US-China relations being the hottest topic ahead of key dates.
Author's summary: Rare earth exports impact trade and risk appetite.