China’s Global Times warns of downtrend in US-China trade – difficult to reverse

China’s Global Times warns of downtrend in US-China trade – difficult to reverse

The Global Times is forthright with its views, a good window into China sentiment 

Latest piece:

  • It has been 18 months since the US began imposing 25 percent tariffs on the first tranche of Chinese goods, and bilateral trade between the world’s two largest economies is still sliding. 
  • Even with a “phase one” trade deal, the downtrend in bilateral trade will be difficult to reverse. 
  • Meanwhile, China’s total trade actually expanded 2.4 percent year-on-year in the first 11 months, indicating that trade with the US is not irreplaceable for China. 

Bolding mine.

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Goldman Sachs sees 10-year Treasury yields rising to 2% on “Phase One” trade deal

Says that there is little scope for the FOMC meeting this week to be a catalyst for movement in the rates market

USGG10YR

The firm’s chief interest rate strategist, Praveen Korapathy, argued that 10-year Treasury yields will probably climb towards 2% if the US and China reach a “Phase One” trade deal but further upside beyond that will probably be limited.

Adding that while risks ahead are substantial, their base case remains for a trade agreement that includes a reduction in existing tariffs and avoids those due to take effect on 15 Dec.

With regards to other events this week, the firm notes that the FOMC meeting should not produce any surprises so it is unlikely to cause a stir in markets.

Just to note, Goldman Sachs’ view for Treasuries next year is that they will end 2020 at around 2.25% “on account of the improved economic outlook and the removal of some tail risks i.e. trade war, Brexit”.

As for the “Phase One” deal, I reckon there could be an initial hint of optimism but as soon as markets get a grip of the fact that the deal isn’t a major game changer in US-China trade relations, the ‘sell the fact’ trade may be more profound in my view.

But we’ll see. First, we need the deal to materialise. Right now, it’s still a matter of “if”.
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WSJ report on deal nearing for a modified US, Canada, Mexico trade agreement

Wall Street Journal on edging closer to a new NAFTA, USMCA trade deal. Citing people familiar with the negotiations:

  • House Democrats and U.S. Trade Representative Robert Lighthizer are nearing a deal for Congress to pass a modified U.S. trade agreement with Canada and Mexico
  • though hurdles remain
  • have narrowed differences over key sticking points in recent days
  • biggest divide is over revising the agreement on the enforcement of labor rules
  • (ps, posted on this earlier, here: NAFTA – Mexican Foreign Minister says will not accept US labor inspections in USMCA)

If USMCA took this long, how long with a phase one agreement with China take? 

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Gold Prices Fall as Uncertainty Over Sino-U.S. Trade Progress Continues

© Reuters.  © Reuters.

Investing.com – Prices of the safe-haven gold fell on Friday in Asia as traders continued to monitor Sino-U.S. trade news.

The U.S. fell 0.4% to $ 1,477.45 by 1:42 AM ET (05:42 GMT).

On Thursday, U.S. President Donald Trump said trade talks were “moving right along”, pushing global equities higher.

Uncertainties over a deal remained, as the president’s comments this week sent mixed signals regarding the trade talk progress.

Trump said overnight that negotiations with China are going “very well” overnight, just one day after he dented hopes for a trade deal by saying that an agreement to end the trade dispute may have to be delayed until after the American presidential election in November 2020.

Meanwhile, U.S. Treasury Secretary Steven Mnuchin told reporters that negotiations between Washington and Beijing were progressing, without a deadline for conclusion.

On the data front, the latest U.S. job report due later in the day is expected to generate some attention.

Gold traders are also awaiting the upcoming U.S. Federal Reserve meeting, which is scheduled next week. The Fed is expected to keep rates on hold at 1.50-1.75%.

Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.

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‘Moving right along’? Shares nudge up after Trump trade talk

© Reuters. FILE PHOTO:  Traders work on the floor of the New York Stock Exchange shortly after the opening bell in New York © Reuters. FILE PHOTO: Traders work on the floor of the New York Stock Exchange shortly after the opening bell in New York

By Tom Wilson

LONDON (Reuters) – World shares ticked up on Friday, buoyed by comments from U.S. President Donald Trump that talks aimed at dialing down the damaging trade war with China were “moving right along”.

Trump’s relatively upbeat tone in comments on Thursday was enough to encourage riskier bets by investors, despite a lack of agreement over whether existing tariffs should be dropped as part of an initial deal to ease the long standoff.

European shares, including the broader Euro , gained 0.4% by late morning, with indexes in Frankfurt and Paris up by similar amounts. Banks, technology firms and retail companies led the gains.

Wall Street futures were set to open in positive territory, too, with gains projected between 0.3%-0.4%.

The cautiously buoyant mood mirrored an appetite for riskier bets in Asia, where MSCI’s broadest index of Asia-Pacific shares outside Japan was up 0.6%.

The MSCI world equity index, which tracks shares in 47 countries, added 0.2% to 555.07 points, not far off a record high of 550.63 hit last January but still on track for a weekly fall.

Investors were hoping the two sides can reach a compromise to at least avoid their worst fear: that the United States goes ahead with its final batch of tariffs on about $ 156 billion of Chinese exports, due to take effect on Dec. 15.

Trump’s remarks came after Chinese officials reiterated demands that some U.S. tariffs be rolled back if the sides are to reach a so-called phase one deal.

Markets had expected the sides to seal the initial deal in November. Instead, investors are nervously watching the approaching deadline for the new U.S. levies.

“The difficulty with this is it’s very difficult to time and to trade,” said Jeremy Gatto, a multi-asset investment manager at Unigestion. “We are relatively favorable towards riskier assets in general – but with hedges.”

Gatto said those hedges include currencies such as the U.S. dollar, Japanese yen and Australian dollar, as well as options.

Investors have already taken precautions against a possible slide in stocks by buying put options, with demand for put options to hedge exposure to the S&P500 index climbing in recent days.

In one sign of detente, China said it would waive import tariffs imposed last year on some U.S. soybean and pork shipments. Beijing is rushing to source more meat to fill a gap in protein supplies.

China stocks posted their biggest weekly advance in nearly two months, with the blue-chips up 0.6%.

Investors were looking out for U.S. jobs data, due out at 1330 GMT. The non-farm payrolls report is expected to show 180,000 new jobs were created in November, up from 128,000 a month earlier.

Signs of buoyancy in the labor market would soothe anxiety over the impact of the trade war.

“Markets are in consolidation phase,” said Salman Ahmed, chief investment strategist at Lombard Odier. “It’s wait and watch for first, how does the non-farm payrolls look and, more importantly, the Dec. 15 tariff deadline.”

In other economic data, German industrial output fell unexpectedly in October, pointing to persistent weakness in the backbone of the economy. Berlin said, however, that new orders and business expectations suggest output may stabilize.

While markets have largely priced in the view that the world economy has dodged the bullet of recession, there are still signs of fragility in many major economies.

OIL SKIDS

Oil prices steadied and were set for weekly gains ahead of a meeting of OPEC and its allies later in the day, where the grouping is expected to formally agree to more output cuts in early 2020.

Sources told Reuters that OPEC+ agreed to a 500,000 barrel per day cut, with the group due to next meet in March.

futures were down 0.3%, or 18 cents, at $ 63.21 a barrel, a retreat from earlier gains.

The agreement coincided with the initial public offering of state oil firm Saudi Aramco, which was priced at the top of its range and raised $ 25.6 billion in the world’s biggest IPO.

In currencies, the British pound lost 0.3% but was still set for its best week since October. It has gained 1.5% against the dollar this week.

Sterling had spiked to a seven-month high of $ 1.3166 on Thursday on bets that next week’s election will give the Conservative party the majority it needs to deliver Brexit, ending near-term uncertainty.

The pound last stood at $ 1.328. It hit 2-1/2-year highs versus the euro.

Against a basket of currencies the dollar has dropped every day this week, falling to a one-month low of 97.356 on Thursday. The index was up a smidgeon at 97.460, and has lost nearly 1% this week.

For Reuters Live Markets blog on European and UK stock markets, please click on: [LIVE/]

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Dollar heads for weekly decline as data and trade tensions weigh

By Tom Westbrook

SINGAPORE (Reuters) – The dollar nursed a week of losses on Friday, hit by nervousness on trade and mixed signals about the U.S. economy, while the British pound stood tall as bets firmed that Prime Minister Boris Johnson can win a commanding electoral victory.

The safe havens of the Japanese yen and Swiss franc were in demand as a hedge against Sino-U.S. trade talks collapsing, and as investors fretted that U.S. jobs figures due later in the day may fail to deliver an expected rebound.

“Markets are in a highly fragile condition at the moment,” said Michael McCarthy, chief market strategist at CMC Markets in Sydney.

“So there is a greater potential for an exaggerated move if we see a big divergence from expectations on non-farm payrolls – but the risk is in both directions, particularly with the lack of trade news.”

The euro () held on to overnight gains against the greenback to buy $ 1.1104, having climbed 0.8% this week. The yen has added 0.9% on the dollar this week and was steady at 108.72 yen per dollar on Friday.

Against a basket of currencies () the dollar has dropped every day this week for a cumulative loss of almost 1%.

The best gains have been won by the soaring and British pound. The kiwi sat just below a four-month high touched on Thursday at $ 0.6541, having gained 1.8% this week as expectations for deep monetary easing have ebbed.

Sterling climbed to a 2-1/2 year high of 84.28 pence against the euro () overnight – holding near there on Friday – and has advanced 1.7% against the dollar this week, last trading at $ 1.3158 .

Opinion polls suggest the ruling Conservatives will win an outright majority in the Dec. 12 election, removing some of the uncertainty around Britain’s exit from the European Union that has weighed on the currency for years. Cable has rallied 10% since September lows.

“There’s still a bit of nervousness about being too convinced,” said Jim Leaviss, head of fixed income at fund manager M&> Investments. “But nevertheless cable seems to think that we do get a clear majority for Boris Johnson,” he said.

“That means that we leave the EU on the 31st of January…I think the options market was pricing in another 7% upside on a Conservative victory, and I think that’s justified fundamentally.”

On the trade front, U.S. President Donald Trump remained upbeat overnight and said talks are “moving right along”.

Worries stem from a lack of similar enthusiasm from the Chinese side, after Chinese officials reiterated their stance that some U.S. tariffs must be rolled back for a deal.

The focus on U.S. non-farm payrolls, due at 1330 GMT, comes after dismal data through the week that showed weak private payrolls, soft services activity and a shrinking manufacturing sector.

A Reuters poll shows a forecast of 180,000 jobs being added in November. “Below 150,000 or above 210,000 we could see a significant market reaction,” said CMC Markets’ McCarthy.

Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.

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Forex- U.S. Dollar Falls on Mixed Trade Signals; Pound Rises 

© Reuters.  © Reuters.

Investing.com – The U.S. dollar fell on Thursday, as mixed trade signals kept investors at bay.

Earlier in the day, China reiterated its expectations that tariffs should be lifted as part of a phase-one deal, after Bloomberg reported on Wednesday that U.S. officials expect a deal before the latest round of American tariffs takes effect on Dec. 15.

The news was a complete turnaround from comments from U.S. President Donald Trump earlier in the week. Trump said Tuesday that a deal could be made after the 2020 election, sending markets reeling.

The , which measures the greenback’s strength against a basket of six major currencies, slipped 0.2% to 97.458 as of 10:31 AM ET (15:31 GMT). The dollar was lower against the safe-haven Japanese yen, with down 0.1% to 108.75.

Elsewhere, the pound continued to rise due to confidence that the Conservative Party will win the general election on Dec. 12. gained 0.2% to 1.3129, while rose 0.2% to 1.1853.

was up 0.2% to 1.1092, despite a fresh drop in German earlier in the day that point to another weak quarter for the euro zone’s largest economy.

The Canadian dollar was edged slightly higher after data showed that Canada’s slightly narrowed in October. fell 0.1% to 1.3184.

Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.

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Asian currencies fueled by new trade optimism

© Reuters.  © Reuters.

Investing.com – Asian currencies made something of a comeback on Thursday morning in Asia as optimism about a possible trade deal between China and the US returned. The USD was lost a little ground and the Australian dollar stopped a multi-day slide even as the continued to slide.

On Wednesday US President Donald Trump said discussions between China and the US are going very well. Negotiators may be closers to an agreement on tariff relief that could help stave off the next round of US tariffs on Chinese goods that is due to take effect Dec. 15, Bloomberg reported. These tariff relief measures would be part of a phase one deal.

Trump’s comments came just a day after saying he has no deadline for a deal and would not be opposed to waiting until after the elections in November 2020.

The US dollar lost some ground. The , which tracks the greenback against a basket of currencies, was down 0.09% to 97.56 by 9:00 PM ET (02:00 GMT).

In mainland China, The People’s Bank of China (PBOC) set the reference rate for the yuan, the midpoint around which the currency is allowed to trade, at 7.0521, slightly weaker than the 7.0513 the day before.

The  pair was up 0.06% to 1.3112.

The  pair was also moving higher and was up 0.07% to 1.1084. 

The  pair gained in morning trading and was up 0.02% to 108.88.

The  pair was near flat, down 0.01% to 0.6848 while the was up 0.34% to 0.6550.

The New Zealand dollar has been gaining ground this week after reports on Monday that the country’s terms of trade, which measures the purchasing power of exports compared to imports, jumped 1.9% in the three months to September.

Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.

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Australian trade balance and retail sales highlight the Asia-Pac calendar

What’s coming up

The trade war is going to continue to dominate but the busy week for Australian fundamentals might finally spark some moves for AUD.

At 0030 GMT (11:30 am in Sydney) we get both Australian trade balance and retail sales . Both reports are for October and threaten to jam the Aussie. The retail sales report in particular is key because the Australian consumer has been a weak spot.

Before that at 0000 GMT, we will get a press conference from RBNZ leader Adrian Orr on the bank capital review. The results will be out an hour earlier.

Other news includes an Australian 20 bond sale sat 0105 GMT and comments from the BOJ’s Harada at 0130 GMT.

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Yen, Swiss franc hold gains as trade war worries deepen

By Stanley White

TOKYO (Reuters) – The yen and Swiss franc held gains against the dollar on Wednesday as appetite for safe-havens spiked after U.S. President Donald Trump warned a trade deal with China might not come until after the 2020 U.S. presidential election.

In offshore trade, China’s yuan traded near its weakest versus the dollar since October due to waning hopes for a truce in trade war between the world’s two-largest economies.

The dollar was broadly sold against major currencies, which helped sterling climb to its highest level in more that six months against the greenback.

Trump’s statement that he had “no deadline” for an agreement with China weakened sentiment and roiled financial markets, because trade friction could drag on global growth longer than many investors had anticipated.

The diminishing prospects for an agreement also reinforced expectations the United States could carry out its plan to raise tariffs even further on Chinese goods on Dec. 15.

“Expectations for a U.S.-China trade deal are fading, and dollar/yen has broken its support levels, so the bias is tilted to the downside,” said Takuya Kanda, general manager of research at Gaitame.com Research Institute in Tokyo.

“More tariffs would push dollar/yen lower still.”

The yen stood at 108.54 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 stood at 7.0691 per dollar, close to its weakest level since Oct. 18.

Graphic: World FX rates in 2019 – http://fingfx.thomsonreuters.com/gfx/rngs/GLOBAL-CURRENCIES-PERFORMANCE/0100301V041/index.html

U.S. Commerce Secretary Wilbur Ross on Tuesday said that while staff-level talks are continuing with Chinese officials, no high-level meetings are scheduled.

If there is no deal or substantial progress in talks before Dec. 15, tariffs on remaining Chinese imports, including cell phones, laptop computers and toys, will take effect, Ross told CNBC on Tuesday.

The () against a basket of six major currencies was quoted at 97.737, having skidded to a one-month low.

Sterling , meanwhile, benefited from the dollar’s slide and rose to $ 1.3014, the highest since mid-May this year.

Trump’s comments on trade so far this week have already caused a major stir.

On Monday, he said he would hit Brazil and Argentina with trade tariffs for “massive devaluation of their currencies”.

The United States then threatened duties of up to 100% on French goods, from champagne to handbags, because of a digital services tax that Washington says harms U.S. tech companies.

Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.

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