Risk Currencies Open With A Bullish Gap As Sentiment Improves on US-China Truce, But Beware..
US President Donald Trump and the Chinese counterpart Xi Jinping have been in intensive talks at the G20 summit that was held in Argentina over the weekend. The market was so concerned about this meeting that it was called the Trump-Xi summit and rightfully so, because the trade war between these two giant economies affect all other economies of the globe.
The tones were positive as they were headed to the summit last week. Over the weekend, we heard that the officials of the two delegations had made a truce. They seem to have ceased fire for now. At first, the market took the comments as a possible trade agreement.
As a result, the sentiment improved considerably in the financial markets and risk assets surged higher. The Kiwi and the Aussie are the most affected from the trade war since these two countries provide a big chunk of Chinese imports, mainly raw materials as well as agricultural products.
Oil is also much higher today as well, as the risk sentiment improves, around 5% as of now. Although that has been also impacted from the OPEC+ meeting that took place in Vienna over the weekend, at the same time as the G20 meeting.
But, China and the US have released contradicting statements and Donald Trump also tweeted about China agreeing to remove car tariffs which are at 40% right now. But, we haven’t heard the same from China or seen it in the statements released by officials of both countries.
So, the markets are trying to figure out what this all means, whether there was/will be a trade deal and risk assets have just stalled at the moment. Therefore, don’t trade big bucks until we are sure what they have actually agreed to over the weekend, guys.
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