The weaker the CNY, the higher the Pork prices in China.
Archives of “August 2019” month
rssGlobal Times editor: China and US didn’t hold phone talks in recent days
Comments by Global Times editor-in-chief, Hu Xijin
The tweet reads:
“Based on what I know, Chinese and US top negotiators didn’t hold phone talks in recent days. The two sides have been keeping contact at technical level, it doesn’t have significance that President Trump suggested. China didn’t change its position. China won’t cave to US pressure.”
That is leading to a bit of a retracement in risk assets again. USD/JPY has fallen from levels just under 106.00 to 105.70 currently. For some context, Hu is often seen as a soundboard to the international community from the Chinese camp.
Though once again, I would still chalk this to more of a case of not confirming Trump’s earlier remarks rather than outright denying them. However, I reckon his remarks on China not changing its position or caving to US pressure holds true.
Dollar holds firmer amid shift in risk mood earlier
Markets are still largely more optimistic following Trump’s remarks on trade
The dollar is holding firmer across the board following Trump’s more optimistic take on trade relations with China earlier in the European morning. Although the greenback has pared its advance against the aussie, it has notably gained against the euro, pound and yen.
EUR/USD is now trading near the lows for the day at around 1.1117 with the euro also finding little comfort from the latest German Ifo survey report moments ago.
Although the dollar is traditionally seen as a haven currency, one of the key factors affecting the currency now is Fed pricing.
Earlier in the day, Fed fund futures saw ~29% odds of the Fed cutting rates by 50 bps in September. After Trump’s remarks, those odds have been slashed to just ~15% now.
As such, that is helping to put a bid back in the dollar. Looking ahead, be wary of potential trade developments as it will continue to play a part in influencing Fed expectations ahead of the September FOMC meeting.
Ifo economist: German industrial sector is in a recession, services is now following
Comments by Ifo economist, Klaus Wohlrabe
- There will be GDP stagnation at most in Q2
- The last time industrial companies demonstrated such pessimism was back in 2009
- Latest developments in trade war not yet reflected by the latest survey
The final comment is arguably the most scary thing about the report here. If sentiment is already this bad, the escalation in the trade rhetoric will only cause the German economic outlook to deteriorate more rapidly in the coming months.
Reminder: Today is a UK bank holiday
London trading will be closed in observance of the Summer Bank Holiday
Just a bit of a reminder/heads up as this may potentially affect liquidity somewhat in the session ahead. That said, with markets so heavily invested into the risk focus at the moment it will be hard to think that trading will be somewhat quiet in the European morning.
US 10 year Treasuries – yield hits its lowest in 3 years
Currency markets have steadied a little but there is plenty still to pay attention to here in Asia at the beginning of the new week.
UST yield has hits its lowest since August of 2016
ICYMi the moves so far were continuations of late Friday US moves, in a nutshell risk off and flows to safe havens. Seeing some retracement now.
AUD/JPY as a barometer:
USDTRY
Donald Trump’s weekend comments on trade war escalation – regrets, retractions, and reversals
US President Trump had comments on Saturday morning on his regrets. Later reversed.
Let’s try to plot a timeline and get some sort of order, bolding mine:
1.
During a breakfast with British Prime Minister Boris Johnson on the sidelines of the Group of Seven meeting … a reporter asked Trump whether he had any “second thoughts” about his escalating trade war with China.
Trump responded, “Yeah, sure. Why not. Might as well,” he said. “Might as well. I have second thoughts about everything.”
2.
Trump then claimed that talks were going well with China and that he planned to back away from some of his recent threats, such as seeking to force companies to leave China.
3.
The White House weighed in later, said Trump’s suggestion that he regretted escalating the trade war with China was “misinterpreted” and that what he regrets is not raising tariffs higher.
On the back down over ordering US companies out of China:
- On Friday, Trump had said that “I hereby order” U.S. companies to prepare to stop doing business with China,
- on Sunday Trump reversed this also, said he had no plans to invoke this law “I have no plans right now,” Trump said. “Actually, we’re getting along very well with China right now.”
—
While Trump can be criticised on a policy level, he is very active on policy setting, on a personal level it does appear he deserves some sympathy with respect to his declining faculties. I hope he can find help and wish him well.
China’s People’s Daily says Trump’s escalation of the tariff war is a “strategic mistake”
Weekend editorial piece in the official paper of China’s ruling Communist Party
- Trump’s decision to escalate the tariff war a “strategic mistake”
- China will not give in to America’s “unreasonable demands”
- latest move makes it impossible for Washington to “win” the trade war
Thought For A Day
