While NATO meeting takes place in London the U.S. President Donald Trump continues the trade standoff.
The US President said that trade talks with China were going “very well. He sounded more positive than on Tuesday when he said a trade deal might have to wait until after the 2020 U.S. presidential election. Further, according to Bloomberg, the United States and China are moving closer to a phase-one trade deal.
Donald Trump on Tuesday had said a trade agreement with China might have to wait until after the U.S. presidential election in November 2020. The US President dented hopes of a resolution soon to a dispute that has weighed on the world economy.
China warned on Wednesday that U.S. legislation calling for a tougher response to Beijing’s treatment of its Uighur Muslim minority will affect bilateral cooperation, clouding prospects for a near-term deal to end a trade war. Approval by the U.S. House of Representatives of the Uighur Act of 2019 has angered Beijing and further strained an already testy relationship.
Expectations of a quick deal had receded already, after U.S. President Donald Trump said on Tuesday that it might take until late 2020 to reach agreement. With a new round of U.S. tariffs on Chinese goods scheduled to take effect in less than two weeks, the possibility of another breakdown is growing.
Investors fear that the U.S.-China standoff will add to the slowdown in the global economy.START TRADING
Forex – Trade standoff on the sidelines of NATO
U.S. President Donald Trump’s statement that he had “no deadline” for an agreement with China hurt sentiment. Money markets are pricing in a quarter point rate cut by the U.S. central bank until July next year.
The dollar traded near one-month lows on Wednesday as markets remained jittery about the progress of Sino-U.S. trade talks. Against a basket of its rivals, it traded at 97.753, above Tuesday’s trough of 97.644, its lowest since Nov. 11.
The greenback declined nearly 1% in the first two trading days this week. Decent eurozone data and surprisingly strong China survey figures raised hopes that the global economy will pick up traction next year and boost demand for non-U.S. currencies.
The yen stood at 108.60 yen versus the dollar on Wednesday, close to its strongest since Nov. 22.
The Swiss franc was quoted at 0.9875 versus the dollar, near its highest level since Nov. 4. Both the Japanese and Swiss currencies tend to be bought as safe havens during times of uncertainty.
The Australian dollar was the biggest loser against the dollar, falling 0.5% versus the greenback after some disappointing third quarter growth data. It retraced a cumulative gain of 1.5% in the last two sessions.
Sterling was the only currency to buck the broader market trend. The pound gained a third of a percentage point against the dollar and the euro, before an election next week. Against the euro too, the pound rallied 0.5% to 84.855 pence, another seven-month high. The pound was little moved by the final IHS Markit/CIPS UK Services Purchasing Managers’ Index survey data, which confirmed that Britain’s services sector shrank in November.
PLEASE NOTE The information above is not investment advice.
Sources: Reuters, Investing, CNN money