U.S. President Trump renewed his threat to cut ties with Beijing a day after the first high-level diplomatic talks between the two economic giants being described as “tense”.
US top diplomats have held first high-level talks with Beijing in months. Trump administration’s trade representative said he did not consider decoupling the U.S. and Chinese economies a viable option. China did recommit to the first part of a trade deal reached this year. The coming weeks would show if there had been progress.
Trump has made rebalancing the massive U.S. trade deficit with China a top priority. But relations have worsened steadily as his campaign for re-election in November heats up.
U.S.-China relations have reached their lowest point in years since the coronavirus pandemic began in China hit the United States hard. Trump and his administration have repeatedly accused Beijing of not being transparent about the outbreak.
Among multiple points of friction, China’s moves to impose new security legislation on Hong Kong is crucial. G7 foreign ministers, including Pompeo, issued a statement calling on China not to follow through with the legislation. Critics call this legislation an assault on the territory’s democratic freedoms.
Trump made clear the deterioration in the relationship last month. He said he had no interest in speaking right now to President Xi Jinping.
The Phase 1 U.S.-China trade deal calls for China to buy $200 billion in additional U.S. goods and services over two years. Sceptics say the pandemic and resulting economic slowdowns will make it difficult for Beijing to reach its targets.
Markets are also focused on an uptick in coronavirus cases in many U.S. states and new infections detected in Beijing.
START TRADINGForex – First high-level US-China talks in months
Traders were switching their attention to a European Union summit. Bloc leaders meet via teleconferencing to navigate regional divisions over a 750-billion-euro coronavirus recovery fund.
U.S. dollar, the world’s reserve currency has gained about 0.3% this week against a basket of currencies, its best performance since mid-May.
The safe-haven Japanese yen firmed a fraction to 106.90 per dollar.
The Australian dollar which has soared by almost 25% from March lows, was up 0.3% at $0.6875. The New Zealand dollar slipped to $0.6407, its lowest since Monday.
The euro was flat $1.1207. The common currency has lost about 1% against the dollar since Tuesday on doubts over whether the recovery plan can be realized.
Sterling fell below $1.24 on data-heavy Friday. Traders shifted their attention from a bounce back in retail sales to the coronavirus-fueled surge in UK public debt. Data showed that British retail sales rebounded more strongly than expected last month and that public borrowing hit a record high. Trade talks with the EU were also in the spotlight.
The pound was 0.3% down against the dollar at $1.2388 by 1025 GMT, its lowest since June 1. Against the euro, the pound was last down 0.3% at 90.46 pence.
Oil prices rose around 1%, adding to gains in the previous session. OPEC+ promised to meet commitments on cutting supply and two major oil traders said demand was recovering well.
U.S. crude futures rose 2.1% to $39.64 a barrel. Brent futures were up 1.8% at $42.27 a barrel, the highest in more than a week.
PLEASE NOTE The information above is not investment advice.
Sources: Reuters, Investing, CNN money