Archives of “June 2019” month

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Sell euro rallies at target 1.10 in coming months – ANZ

  
Analysis, Forex

ANZ with a rare euro-bearish call

ANZ Research discusses EUR/USD outlook and adopts a bearish bias over the medium-term.

“Sell EUR rallies as EA disinflation pressures grow. The ECB is clear that its policy options are not limited, but the persistence of negative interest rates does imply constraints. Whilst the US FOMC indicated it will cut interest rates to underpin the expansion if necessary, our assessment is that disinflation risks in the euro area are much greater,” ANZ notes.

“The bund yield is at record lows, measures of inflation expectations have also made record lows recently and confidence that inflation will reach the ECB’s target is fading. The factors underpinning euro area weakness are, to a large extent, external to monetary policy. They include trade tensions, auto industry difficulties, climate change targets and lingering fiscal risks. It is reasonable to argue that inflation expectations could converge on core inflation. Monetary conditions must therefore stay extremely accommodative.

We look for a test below 1.10 in EUR/USD in coming months,” ANZ adds.

Unlikely US would agree to lift restrictions on Huawei – US official

  
  Analysis
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US official cited by Reuters

  • Trump’s decision on whether to impose more tariffs on Chinese goods depends on meeting with Xi, nothing agreed ahead of time
  • Unlikely US would agree to lift restrictions on Huawei
From China’s perspective, it would make sense that Xi wouldn’t agree to meet without assurances that more sanctions wouldn’t be applied. If Trump walks out of the meeting and hits the US with a fresh round, it would reflect poorly on the leader. In general, these things are always agreed on ahead of time, with room for tweaks.

China wants ‘balanced’ trade deal at G20 but US isn’t interested – report

  
  Analysis

CNBC report

Some negative trade news crossing. Here’s the story.
China believes any new agreement will need to be evenhanded, while U.S. Trade Representative Robert Lighthizer told his Chinese counterparts that balance won’t happen, according to CNBC’s Kayla Tausche, citing a person with knowledge of the White House position.
It’s not all bad news. It says a truce is still possible at this meeting, even if there isn’t an agreement on these issues.

China says cooperation is the only right option in trade talks

  
Analysis, Economy

Comments by China’s commerce ministry

  • Urges US to immediately cancel sanctions on Chinese firms including Huawei
  • Hopes that US will drop its wrongdoings
  • Says that it is not feasible for firms to shift their supply chain out of China
  • Calls for favourable environment ahead of Trump-Xi meeting
Based on their remarks here, it’s not really suggestive that there’s a so-called trade truce already agreed between the two countries ahead of the Trump-Xi meeting. Regardless, the outcome of talks over the weekend will still be the key driver for markets currently.
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