U.S. Dollar Retreats Amid U.S.-China Trade Tensions, Safe-Haven Currencies Rise

Economic

Forex

Summary:

The U.S. dollar experienced a sharp pullback on October 14, 2025, following renewed U.S.-China trade tensions. This development dampened market sentiment...

The U.S. dollar's brief rebound came to a halt on Tuesday, October 14, 2025, as fresh signs of strain in U.S.-China trade relations stoked market uncertainty. After U.S. President Donald Trump had earlier shown a more conciliatory stance on tariffs, new developments signaled that the trade dispute between the two global powers remains unresolved. The dollar’s retreat was evident as risk sentiment soured, with investors flocking to safe-haven currencies in response to geopolitical tensions.

Escalating U.S.-China Tensions

The latest flare-up in U.S.-China tensions stemmed from Beijing's announcement of countermeasures against five U.S.-linked subsidiaries of South Korean shipbuilding firm Hanwha Ocean. Additionally, China launched an investigation into the impact of a U.S. Section 301 probe on its domestic shipping industry. These actions came alongside the commencement of new fees on ocean shipping by both countries, which began on October 14. As a result, the dollar weakened across major currencies, reversing the earlier gains made in the session.

The euro appreciated by 0.14% to $1.1585, while the British pound rose by 0.12% to $1.3351. The Australian dollar, typically seen as a barometer for global risk appetite, dropped 0.63% to $0.6475, while the New Zealand dollar lost 0.5% to $0.5697.

Structural Tensions and Geoeconomic Realities

Vishnu Varathan, head of macro research for Mizuho, commented on the situation, noting that Beijing is clear in its demand for fair negotiations based on mutual respect. However, the structural nature of the tensions rooted in broader geoeconomic shifts suggests that these issues cannot be resolved easily or quickly. According to Varathan, these trade dynamics are not cyclical but represent a long-term feature of U.S.-China relations.

China’s recent rare earth export controls, which were communicated to the U.S. ahead of their implementation, add another layer of complexity to the dispute. Despite these challenges, China continues to seek constructive dialogue with the U.S., signaling that while tensions may persist, both parties remain engaged in diplomatic efforts.

Safe-Haven Currencies Strengthen

As geopolitical uncertainties heightened, safe-haven currencies like the yen and the Swiss franc gained ground. The Swiss franc strengthened by 0.2% to 0.8027, while the yen rebounded from earlier losses, rising 0.3% to 151.86 against the dollar. However, political instability in Japan, notably surrounding the candidacy of Sanae Takaichi for prime minister, capped the yen’s upward movement, with the currency remaining near eight-month lows.

Nigel Foo, head of Asian fixed income at First Sentier Investors, noted that the U.S.-Japan interest rate differential should eventually support a reversal in the yen’s current trend. Despite short-term political uncertainties, Foo anticipates that the yen will strengthen in the future.

Cryptocurrency Market Hit by Risk-Off Sentiment

The broader selloff in risk assets also extended to cryptocurrencies. Bitcoin dropped by 2.7% to $112,714.58, and Ether saw a more significant decline of 4.9%, falling to $4,077.79. The cryptocurrency market faced significant liquidations on October 13, with over $19 billion in leveraged positions being wiped out. Panic selling and low liquidity contributed to these sharp swings, further emphasizing the broader market’s risk-off mood.

In conclusion, the U.S. dollar’s retreat on October 14, 2025, was driven by heightened U.S.-China trade tensions, reinforcing investor caution. As the situation continues to evolve, the dollar faces continued pressure, while safe-haven currencies like the yen and Swiss franc are poised to benefit from ongoing geopolitical uncertainties. Additionally, the cryptocurrency market’s struggles highlight the broader risk-off sentiment affecting global markets.

Source: Reuters

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Gerik

Economic

On October 14, 2025, Publicis, one of France's largest advertising firms, announced it was increasing its full-year organic growth forecast for the second time, crediting artificial intelligence (AI) as the driving force behind its growth. CEO Arthur Sadoun highlighted the company’s AI-powered strategies as pivotal to accelerating both its clients' and its own growth, amid increasing competition and industry uncertainty surrounding the true potential of AI.

AI as a Growth Engine

Publicis now claims that 73% of its operations are powered by AI, underscoring the firm's substantial investment in technology, data, and AI since 2015. Over the past decade, the company has spent 12 billion euros ($12.7 billion) in these areas, enabling it to analyze consumer behavior from over 4 billion individuals worldwide. This data-driven approach allows Publicis to fine-tune its advertising strategies and offer personalized solutions that cater to individual consumer preferences.

Sadoun emphasized that AI’s true value is realized when it is paired with the right technological infrastructure and data. He cautioned against the misconception that AI can operate effectively in isolation, highlighting the importance of the foundational technologies that support AI functions. Publicis' deep investments in AI and data have given it an edge over competitors, helping the company secure significant market share.

Publicis’ Strong Performance in the Market

The company’s third-quarter results showed a robust 5.7% organic growth in net revenue, contributing to $6 billion in new business over the first nine months of the year. In contrast, competitors like WPP, Omnicom, Dentsu, and Interpublic have seen either stagnant or declining growth, according to JPMorgan data. Publicis has managed to retain 98% of its top 100 clients over the last five years, a testament to the effectiveness of its AI-powered services.

Notable new clients acquired this quarter include PayPal, Paramount Skydance, and Orange, further solidifying Publicis’ competitive edge. The company’s ability to secure high-profile clients amid growing industry challenges demonstrates the tangible benefits of its AI-driven strategies.

Raising the Forecast

In response to its strong performance, Publicis has raised its 2025 organic growth forecast to 5.5%, up from the previous target of nearly 5%. This updated projection reflects the firm’s confidence in its AI-driven capabilities and continued client demand for innovative marketing solutions.

In conclusion, Publicis has leveraged its significant investments in artificial intelligence to drive strong growth and outpace its competitors in the advertising industry. As AI continues to power its operations, the company’s ability to innovate and offer personalized solutions has helped it maintain client loyalty and capture new business. With an upgraded growth forecast, Publicis’ commitment to AI promises to further solidify its position as a leader in the global advertising landscape.

Source: Reuters

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Glendon

Economic

Forex

The UK labor market showed further signs of stabilization in fresh data on Tuesday, with employers appearing to be over the worst of the shake-out triggered by the £26 billion ($34.7 billion) payroll tax increase that hit in April.

The number of employees on payrolls dropped 10,000 in September following a revised increase of 10,000 the month before, the Office for National Statistics said. It was in line with the fall economists had predicted and less sharp than the cuts seen over the summer.

Meanwhile, wage growth in the private sector slowed to 4.4% in the three months through August, the lowest since the end of 2021 and below expectations. However, the figure is well above the 3% or so the Bank of England reckons is compatible with its 2% inflation target. Job vacancies fell just 9,000 in the three months to September.

The figures are likely to fuel the debate at the central bank over whether inflation that has surged to almost double the 2% target could trigger feedback loop by fueling wage demands that then lead to more price increases.

Policymaker Megan Greene highlighted the risk of second-round effects in a speech on Monday, and markets are all-but ruling out further rate cuts this year. However, others believe the disinflation process remains in tact, potentially leaving the decision with Governor Andrew Bailey as the crucial swing voter on the Monetary Policy Committee.

Bailey, who has struck a fine balance in recent comments, is due to speak in Washington later Tuesday, one of a number of appearances by BOE policymakers this week.

Job cuts in response to tax and minimum-wage increases in April have slowed in recent months, and the loss has been smaller than originally estimated. The figure chime with a key survey from Recruitment & Employment Confederation and KPMG that found the labor market stabilizing in September across a number of metrics.

Economists are officials are now paying more attention to private-sector polls and the payrolls data, which are based on tax records, after a collapse in response rates to the ONS’s Labour Force Survey raised questions about the reliability of official readings.

Source: Bloomberg Europe

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Samantha Luan

Forex

Political

China–U.S. Trade War

Economic

China Hits Back At US On Shipping With Hanwha Curbs, Probe_1

The Hanwha Philly Shipyard in Philadelphia, Pennsylvania.

China has threatened further retaliatory measures against US curbs on its shipping sector, after sanctioning American entities of a South Korean shipping giant.The Ministry of Commerce said Tuesday it was placing limits on five US entities of Hanwha Ocean Co., one of South Korea’s biggest shipbuilders. The company’s shares dipped as much as 8% in Seoul, their biggest decline in about two months.The moves are a marked escalation in a long-standing dispute between the world’s two largest economies over maritime dominance. It comes after tensions between the US and China escalated in recent weeks as President Donald Trump threatened additional 100% tariffs on imports from the Asian nation in response to new Chinese export controls.

This week, retaliatory levies on American-owned ships arriving in China came into effect as a tit-for-tat move by the Xi administration, causing concern across the global maritime sector. Beijing’s new curbs forbids any individual and entity from doing business with the five companies.Meanwhile, the Ministry of Transport said that it was conducting a probe into the impacts from the US Trade Representative’s Section 301 investigation into China’s maritime sector, and may implement retaliatory measures in due time.

That dispute has consequences for global economy, as vessels are involved in 80% of worldwide trade. Washington announced in April plans to curb China’s shipbuilding prowess even as it sought to build up American capabilities. That had forced Chinese yards to lose some market share, while Chinese shipping lines faced severe penalties for calling at US ports.At the same time, South Korean shipbuilders have offered Washington sweeteners to help the US revive its shipbuilding sector. Hanwha Ocean was the first Korean yard to acquire an American one, and has been seeking to transfer some of that know-how to American shores.

The five firms curbed by China are Hanwha Shipping LLC, Hanwha Philly Shipyard Inc., Hanwha Ocean USA International LLC, Hanwha Shipping Holdings LLC and HS USA Holdings Corp.

Spokespersons for Hanwha Ocean in Seoul and Hanwha USA didn’t

Source: Yahoo Finance

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James Whitman

Political

France’s Sebastien Lecornu will address parliament for the first time as prime minister on Tuesday, a make-or-break moment for his fledgling government in its effort to pass a budget and bring some political stability.

The 39-year-old premier, who was reappointed on Friday, just four days after resigning amid political infighting, will deliver the closely-watched policy speech to the National Assembly at 3 p.m. Paris time, after presenting a draft budget to cabinet in the morning.

Marine Le Pen’s far right and the far left have vowed to try to topple Lecornu in no-confidence ballots later this week, regardless of what he says. That leaves his survival as prime minister dependent on the concessions he offers on Tuesday to convince an array of other parties to abstain.

If Lecornu fails, he would become the third prime minister to be forced to resign in less than a year, leaving President Emmanuel Macron with few options other than calling another legislative election. Last year’s snap vote and the ensuing fiscal and political uncertainty already triggered selloffs of French assets that have pushed up the country’s borrowing costs compared to peers.

“Our sole mission is to rise above and move beyond this political crisis in which we find ourselves — a crisis that has left part of our fellow citizens stunned, and perhaps also a part of the world watching us,” Lecornu told new cabinet ministers at a meeting on Monday.

With his premiership hanging by a thread, pressure is on Lecornu to cede to demands to pick apart eight years of Macron’s economic policies, even as tries to cut the deficit and reassure investors.

The Socialists, who have a pivotal role in this week’s no-confidence votes, are demanding a new wealth tax and higher levies on companies, smaller budget cuts, and a suspension of the president’s signature 2023 law that is gradually raising the minimum retirement age to 64 from 62.

The pension reform has crystallized debate in recent days and so far the center-left group has dismissed Macron’s proposal, made last Friday, to delay rather than suspend the application of the measures.

“If he sticks with his proposal, we won’t enter into debate on the budget and we will censure immediately,” Socialist Party leader Olivier Faure said in an interview with La Tribune Dimanche. “It’s time to choose.”

But for Lecornu, capitulating would test the support of what remains of Macron’s centrist Renaissance party in parliament, as well as center-right lawmakers who have said they are against repealing the changes to the pension system. Although unlikely, if they were to vote in favor in a no-confidence motion Lecornu would fall even if the Socialists abstained.

“It’s painful because it’s a reform Renaissance lawmakers and I completely committed to,” Equality Minister Aurore Berge said Monday on RMC radio.

Lecornu must also compromise with demands for less belt-tightening after the Socialists were among groups that voted in September to topple former premier Francois Bayrou over his plan to narrow the deficit to 4.6% of economic output in 2026 from 5.4% expected this year.

However, Lecornu has diminished control over the fiscal plans since he pledged not to use a constitutional tool known as article 49.3 to adopt bills in parliament without a vote. Still, he has said the target must not slip to any wider than 5% if France is to remain credible on markets.

Source: Bloomberg

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Gerik

Economic

On October 14, 2025, China intensified its economic retaliation against the United States by sanctioning five U.S. subsidiaries of Hanwha Ocean, a major South Korean shipbuilding company. This sanction is seen as a direct response to U.S. actions aimed at China’s shipping industry. The decision, which immediately prohibits Chinese entities and individuals from conducting business with these sanctioned companies, reflects the growing economic and political strain between the two nations.

Details of the Sanctions

The sanctioned subsidiaries include Hanwha Shipping LLC, Hanwha Philly Shipyard Inc., Hanwha Ocean USA International LLC, Hanwha Shipping Holdings LLC, and HS USA Holdings Corp. The Chinese Ministry of Commerce’s announcement comes after the U.S. imposed significant fees on Chinese ships docking at American ports, starting at 12:01 a.m. EDT on October 14. In retaliation, China introduced a charge of 400 yuan ($56) on U.S. vessels docking at Chinese ports, escalating the economic confrontation.

This move is part of a broader escalation in trade and diplomatic tensions between the two superpowers. Alongside the sanctions, China has also tightened its control over rare earth exports, a critical resource for various high-tech industries, and expanded its blacklist of U.S. companies. These actions demonstrate China’s increasing use of economic measures to counter perceived U.S. pressures on its industries.

The Impact on Hanwha Ocean

The immediate effect of China’s sanctions was a sharp drop in the share price of Hanwha Ocean, which fell by more than 8% on the Seoul Stock Exchange. The sanctions directly target the company’s operations in the U.S., which are crucial to its global supply chain. With Chinese organizations now prohibited from doing business with Hanwha’s subsidiaries, the company faces significant operational disruptions, especially considering the importance of the Chinese market for the shipping and shipbuilding sectors.

This sanction is the latest in a series of retaliatory measures between the U.S. and China. In response to China's increasing restrictions, U.S. President Donald Trump threatened to double tariffs on Chinese imports. This tit-for-tat escalation further complicates the ongoing trade dispute, with both countries pushing back against each other's economic strategies.

Beijing has defended its actions, asserting that the restrictions on rare earth exports and sanctions against U.S. subsidiaries are legitimate and in response to U.S. interference in Chinese markets. As both sides continue to leverage economic pressure, the global shipping and trade industries may face further disruptions.

China's decision to sanction Hanwha Ocean’s U.S. subsidiaries marks a significant escalation in the ongoing tensions between the U.S. and China. With both nations imposing retaliatory tariffs and sanctions, the economic landscape is becoming increasingly volatile, affecting businesses and industries worldwide. As these tensions continue to unfold, the global shipping industry and U.S.-China trade relations will likely face additional challenges. The impact on Hanwha Ocean, with its plummeting stock prices, underscores the real-world effects of these diplomatic confrontations.

Source: CNBC

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Gerik

Economic

Trump’s Tariffs and Their Impact on U.S. Consumers and Businesses

The full effects of President Donald Trump's import tariffs are becoming evident, with early data showing that U.S. companies and consumers are bearing much of the cost, contrary to the President’s claim that foreign exporters would shoulder the burden. Studies by Harvard University and Yale have shown that U.S. businesses are absorbing the impact of these tariffs, with some costs being passed on to consumers. As a result, prices for imported goods have risen significantly, with some sectors seeing price hikes of up to 4%, while domestic products have increased by a more modest 2%.

The most significant price increases have occurred in products that the U.S. cannot produce domestically, such as coffee and electronics, as well as items imported from countries heavily penalized by U.S. tariffs, like Turkey. Despite the tariff burden, some sellers have absorbed part of the increased costs, indicating that foreign exporters have not been able to fully pass the costs onto U.S. buyers, as President Trump had hoped.

Long-Term Effects of Tariffs on U.S. Inflation and Supply Chains

While some price increases have been material, the full effect of the tariffs on U.S. inflation and the broader economy is still unfolding. The tariffs, which have pushed import taxes from an average of about 2% to an estimated 17%, are part of a longer-term adjustment process. As businesses and consumers continue to adjust to the higher costs, further price hikes are expected.

Companies, including Procter & Gamble and EssilorLuxottica, have already increased prices on products, reflecting the broader economic impact of tariffs. Meanwhile, European companies, particularly in the manufacturing sector, are also feeling the squeeze, with 72% of firms in Europe, the Middle East, and Africa signaling price hikes.

Federal Reserve Concerns and Global Trade Impacts

The rise in consumer prices has added pressure on the Federal Reserve, which has already cut interest rates amid concerns about a weakening job market. However, Fed officials are divided on whether the tariff-driven inflation will persist. Some argue that the impact will be short-lived, while others, including Stephen Miran, believe the tariffs will not significantly contribute to inflation.

Internationally, global trade has also suffered from the U.S. tariffs, with exports to the U.S. from Europe and other regions declining sharply. The World Trade Organization has downgraded its forecast for global trade growth next year, citing the delayed impact of U.S. tariffs. The European Union, for instance, has seen its exports to the U.S. drop by 4.4%, and Germany’s exports to the U.S. fell by a striking 20.1%.

The reality of Trump’s tariffs is far from the original promises made by the administration. As U.S. consumers face higher prices and businesses absorb the costs, the overall economic impact is proving to be more significant than initially anticipated. With global trade slowing and inflationary pressures rising, the path forward for the U.S. economy remains uncertain. The Federal Reserve will likely need to adjust its strategies to counteract the longer-term effects of these tariffs, and the global economic outlook could continue to face headwinds.