China Vice Premier Liu He will be flying to Washington today to commence phase one talks on 15 January. We could see a shift into risk-on sentiments this week.

Glimmer of hope in US-China trade tunnel

  • The agreement includes protections for intellectual property, food and farm goods, financial services and foreign exchange, and a provision for dispute resolution.
  • The deal includes improvements on the technology transfer requirements that Beijing imposes on foreign companies, as well as better access to the Chinese market for financial services.
  • Washington said Beijing has pledged to buy an additional US$200 billion American goods over two years, compared to 2017 purchases.
  • Under the tariffs part of the deal, Trump cancelled 15% tariffs that had been due to hit US$160 billion worth of Chinese goods on Sunday, especially electronics like cell phones and computers, which would have been particularly painful to US consumers.
  • While Chinese officials said the US agreed to roll back the other tariffs in stages, for now Washington will keep in place the 25% duties on US$250 billion worth of imports.
  • Volatility in the market could increase on Wednesday when the actual signing of the phase one deal should take place.

Our Picks

USD/CAD – Slightly bearish.

This pair may fall towards the 1.3000 price level after breaking a strong resistance.

usdcad

 

USD/JPY – Slightly bearish.

This pair may fall towards 109.30 before moving higher.

USDJPY

 

XAU/USD (Gold) – Slightly bullish.

We expect price to rise towards 1535 in the coming weeks due to risk aversion.

xauusd

 

SPXUSD (S&P 500) – Slightly bearish.

Index may fall towards 3262 this week from profit taking.

spxusd

 

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Fullerton Markets Research Team

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