Fresh Progress Noted
Global risk appetite has been bolstered this week by encouraging reports regarding the health of US/China trade negotiations. The Office of the US Trade Representative confirmed this week that further discussions had taken place between itself and Chinese officials. The statement released by the USTR confirmed that telephone calls had taken place between US Trade Representative Robert Lighthizer, US Treasury Secretary Steven Mnuchin and Chinese Vice Premier Liu He.
The statement noted that that both sides saw “progress” relating to the deal and remain “committed to taking the steps necessary to ensure the success of the agreement”. Chinese state media, Xinhua News Agency also commented on the talks with its website saying that US and Chinese officials had a “constructive dialogue” and agreed to “create conditions and atmosphere to continue pushing forward the implementation of the trade deal”.
Simmering Tensions
News of the talks has helped alleviate concerns which have been building over recent months regarding the visible deterioration in US/China relations. The two leading economies have seen a number of stand-offs in recent months most notably linked to US criticism of China regarding its role in the COVID-19 outbreak. The nations have also clashed over the recently implemented Chinese security law in Hong Kong as well as over the planned role out of 5G networks in the US.
As part of the phase one trade deal, China has agreed to scale up its purchases of US goods by over $200 billion, with $32 billion of this earmarked for agricultural purchase. China has also agreed to carry out reforms to ensure better protection of intellectual property for US businesses operating there along with continued opening up of financial markets.
Talks Regaining Traction Following COVID-19 Disruption
The outbreak of COVID-19 has placed a great deal of pressure on both nations and the trade talks, which had been due to progress to the next round, aimed at delivery a second phase deal, have lost some traction. There are hopes now that the two sides will be able to place a renewed focus on the talks and continue developing the negotiations further.
Technical Views
USDCNH (bearish 6.9065)
From a technical viewpoint. USDCNH continues to trend lower here with price now moving below the 6.9065 level support. The tone remains very heavy and the near-term outlook remains bearish. The next downside region to watch is the 6.8470 level support.
Disclaimer: The material provided is for information purposes only and should not be considered as investment advice. The views, information, or opinions expressed in the text belong solely to the author, and not to the author’s employer, organization, committee or other group or individual or company.
High Risk Warning: CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 73% and 76% of retail investor accounts lose money when trading CFDs with Tickmill UK Ltd and Tickmill Europe Ltd respectively. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.
Disclaimer: The material provided is for information purposes only and should not be considered as investment advice. The views, information, or opinions expressed in the text belong solely to the author, and not to the author’s employer, organization, committee or other group or individual or company.
Past performance is not indicative of future results.
High Risk Warning: CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 75% and 75% of retail investor accounts lose money when trading CFDs with Tickmill UK Ltd and Tickmill Europe Ltd respectively. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.
Futures and Options: Trading futures and options on margin carries a high degree of risk and may result in losses exceeding your initial investment. These products are not suitable for all investors. Ensure you fully understand the risks and take appropriate care to manage your risk.
Patrick has been involved in the financial markets for well over a decade as a self-educated professional trader and money manager. Flitting between the roles of market commentator, analyst and mentor, Patrick has improved the technical skills and psychological stance of literally hundreds of traders – coaching them to become savvy market operators!