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Chinese Liu said to visit Washington this Saturday to sign trade deal

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    ActionForex.com
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    The SCMP in Hong Kong reported that Chinese Vice Premier Liu He would lead a delegation to Washington this Saturday to sign the phase one trade deal with the US. The delegation is then expected to stay in the US for a few days, before leaving in the middle of next week. At this point, there is no confirmation for the arrangement yet.

    The news is somewhat consistent with US Trade Representative Robert Lighthizer’s comment on December 13, that the deal would be signed “in the first week of January. Nevertheless, it’s inconsistent with President Donald Trump’s comment that there will be a signing ceremony when he and Chinese President Xi Jinping “get together”.

    EU Hogan seeks a reset in trade relationship with US

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      ActionForex.com
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      EU Trade Commissioner-designate Phil Hogan told the Irish Times that he’s “seeking a reset” of the trade relationship with US. In particular, he noted that steel aluminum tariffs and threat of tariffs in response to a digital tax in Europe.

      Hogan spoked with US Trade Representative Robert Lighthizer just before Christmas. He added, “We agreed to meet in Washington in mid-January to discuss the long list of issues causing strain in the relationship between the EU and the US. There is no point in getting into the details of resolving trade irritants unless we agree a line on a common trade agenda.”

      Swiss KOF recovered all 2019 losses, but outlook still subdued

        By
        ActionForex.com
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        Swiss KOF Economic Barometer rose to 96.4 in December, up from 92.6, beat expectation of 94.5. The indicator has now fully recovered the decline this year, back to the closing level in 2018. Nevertheless it’s still below it’s long run average. And KOF said “the outlook for the Swiss economy at the beginning of 2020 is brightening somewhat, but remains subdued.

        KOF added: “The distinct increase is primarily due to bundles of indicators from the manufacturing sector. Positive signals also result from indicators covering other services and foreign demand. Indicators concerning private consumption as well as hotel and catering activities show a moderate increase.”

        Full release here.

        Chinese ambassador urges US to honor commitment on one-China policy

          By
          ActionForex.com
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          In an interview with Chinese state television CGTN on Saturday, China’s ambassador to US Cui Tiankai urged US to “honor their commitment” on one-China policy. Meanwhile, he also claimed that “we always honor our commitment” regarding trade.

          Cui emphasized a “local election in Taiwan is a local election in Taiwan, province of China. As far as the US is concerned, the US has made commitments to the one-China policy in the three joint communiques between China and the US, and I just hope they will honour their commitment”.

          He added that “the bottom line is the one-China principle. There is only one China in the world. Both Taiwan and the Chinese mainland are part of China. China’s sovereignty and territorial integrity should not be violated.”

          On trade, Cui said, “as far as we are concerned, we always honour our commitment. We will always implement what we promised. There is no problem about that”. And, “I’m confident that since we have spent so much time with such great efforts at reaching this agreement, I think it would certainly serve the interests of both sides if this agreement is implemented.”

          US warned more more sanction against Iran after air strikes

            By
            ActionForex.com
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            On Sunday, US military carried out air strikes in Iraq and Syria, against the Kataib Hezbollah militia group which is Iran-backed. That was in response to killing of a US civilian contractor in a rocket attack on an Iraqi military base.

            US Secretary of State Mike Pompeo told reports that “we will not stand for the Islamic Republic of Iran to take actions that put American men and women in jeopardy.” Defense Secretary Mark Esper said the strikes were “successful” warned of “additional actions as necessary to ensure that we act in our own self-defense and we deter further bad behavior from militia groups or from Iran.”

            North Korea Kim pledges positive and offensive security measures

              By
              ActionForex.com
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              North Korea somewhat catches some attention in a very quiet start to the week, end to the year. State media KCNA reported that, on Sunday, leader Kim Jong Un emphasized the need to take “positive and offensive measures for fully ensuring the sovereignty and security of the country”. Kim said that at the largest plenary session of the Workers’ Party since 2013.

              Separately, ABC reported that North Korea promised to deliver a “Christmas gift” to the US. Some saw that as echoing the “positive and offensive measures” and could point to some long-range missile tests, or even more nuclear weapons tests.

              On the issues, White House national security adviser Robert O’Brien said: “We’ll reserve judgment, but the United States will take action as we do in these situations. If Kim Jong Un takes that approach, we’ll be extraordinarily disappointed and we’ll demonstrate that disappointment.”

              EU von der Leyen: Time extremely short for mass negotiations with UK

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                ActionForex.com
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                European Commission President Ursula von der Leyen told German Der Spiegel that she’s worried about UK’s schedule to complete negotiations of future relationship by end of 2020. She said, “that worries me a lot, because time is extremely short for the mass of issues that have to be negotiated.”

                Separately, she told French daily Les Echo that both sides need to needed to seriously assess if there is enough time to complete trade negotiations. And, “it would be reasonable to evaluate the situation mid-year and then, if necessary, agree on extending the transition period.”

                ECB: Global recovery projected to be shallow

                  By
                  ActionForex.com
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                  ECB said in its monthly economic bulletin that more recent information “points to a stabilisation in global growth”. In particular, survey-based data like PMI point to a “moderate recovery in manufacturing output growth and some moderation in services output growth”. Nevertheless, global recovery is projected to be “shallow”, reflecting moderation of growth in advanced economies and sluggishness in some emerging markets.

                  For Eurozone, however, ongoing weakness of international trade continues to weigh on manufacturing sector and is dampening investment growth. Survey-based data, while remaining weak overall, point to some stabilization of slowdown too.

                  Measures of underlying inflation in Eurozone “generally remained muted”. ECB added, that “market-based indicators of longer-term inflation expectations have remained at very low levels, while survey-based expectations also stand at historical lows.

                  Full ECB Monthly Bulletin here.

                  US stocks extend record run as NASDAQ breaks 9000

                    By
                    ActionForex.com
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                    US stocks extended record run in holiday trading this week, with all three major indices closing at new record highs. S&P 500’s rally in the past two week is impressive, with strong pick up in upside momentum. Long term channel resistance was taken out without much hesitation.

                    Overbought condition in weekly RSI shouldn’t limit the rally for now. Current up trend is now on track to 100% projection of 1810.10 to 2940.91 from 2346.58 at 3477.39. Though, strong resistance should be seen around there to bring corrections.

                    NASDAQ also extended recent up trend and closed above 9000 level for the first time. It’s now facing long term channel resistance. Considering that equivalent resistance was taken out by S&P 500 rather decisively, we’d expect NASDAQ to follow soon. NASDAQ should be heading to 100% projection of 4209.76 to 8133.30 from 6190.17 at 10113.71.

                    BoJ: May need to expand QQE after consumption tax hike, just like 2014

                      By
                      ActionForex.com
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                      In the Summary of Opinions at BoJ’s December 18-19 meeting, it’s noted there has been “no further increase” in the possibility that momentum toward achieving price target will be lost. Therefore, maintaining the current guidelines for market operations and asset purchases is “appropriate”.

                      Nevertheless, downside risks to economic activity and prices “continue to warrant attention”, mainly regarding overseas developments. And it’s appropriate to maintain a stance of being “tilted toward monetary accommodation”. With risks “skewed to the downside” BoJ should continue to examine “whether additional monetary easing will be necessary”.

                      In particular, it’s noted that BoJ expanded QQE around half a year after the previous consumption tax hike in 2014. “It may become necessary to conduct further monetary easing this time as well”.

                      Full summary of opinions here.

                      Japan industrial production and retail sales contracted

                        By
                        ActionForex.com
                        -

                        Economic data released from Japan showed strain in both the business and consumer sides of the economy. Industrial production dropped for the second month in a row, by -0.9% mom in November. Though, that came in better than expectation of -1.4% mom. Back in October, production dropped -4.5% mom, largest month-on-month decline since 2013. Both months’ data pointed to sharp contraction in factory output in Q4.

                        Meanwhile, retail sales dropped -2.1% yoy in November too, worse than expectation of -1.7% yoy. Back in October, sales dropped sharply by -7.1% as sales tax hike took effect, worst since 2015. Sales had clearly not recovered yet and is poised to have a weak quarter too.

                        Though, on the positive side, unemployment rate dropped to 2.2% in November, down from 2.4%, beat expectation of 2.4%. Tokyo CPI accelerated to 0.8% yoy in December, up from 0.6% yoy, beat expectation of 0.6% yoy.

                        US initial claims dropped to 222k, matched expectations

                          By
                          ActionForex.com
                          -

                          US initial jobless claims dropped -13k to 222k in the week ending December 21, matched expectations. Four-week moving average of initial claims rose 2.25k to 228k.

                          Continuing claims dropped -6k to 1.719m in the week ending December 14. Four-week moving average of continuing claims rose 19.25k to 1.704m.

                          Full release here.

                           

                          BoJ Kuroda: Global uncertainties eased somewhat, but downside risks remain significant

                            By
                            ActionForex.com
                            -

                            BoJ Governor Haruhiko Kuroda said today, at the annual meeting of Keidanren, “while continuing to carefully examine various risks, the BOJ will not hesitate to take additional easing measures if there is a greater possibility that the momentum toward achieving the price stability target will be lost.”

                            He acknowledged that “uncertainties over the global economy, including developments in U.S.-China trade negotiations, have eased somewhat. But he also warned, “the BOJ considers that downside risks regarding the outlook for the global economy remain significant.”

                            China’s soybean import from US surged as both sides prepare for trade deal signing

                              By
                              ActionForex.com
                              -

                              China’s import of US soybeans surged to 2.6m tonnes in November, hitting the highest level since March 2018. That compared to 1.1m tonnes in October and virtually zero from a year ago. On the other hand, soybean shipments from Brazil was nearly unchanged at 3.9m tonnes, comparing to 3.8m tonnes in October, but down -24% from 5.1m tonnes last year.

                              Agricultural purchases by China is set to rises further as the US and China are set to sign the phase one trade deal soon, likely in January. US President Donald Trump said on Tuesday that “we will be having a signing ceremony, yes. We will ultimately, yes, when we get together. And we’ll be having a quicker signing because we want to get it done. The deal is done, it’s just being translated right now.”

                              Chinese Foreign Ministry spokesman Geng Shuang said on Wednesday, “both sides’ economic and trade teams are in close communication about detailed arrangements for the deal’s signing and other follow-up work.”

                              Gold ready to resume up trend through 1557, to target 1625 projection level

                                By
                                ActionForex.com
                                -

                                Gold surges sharply in the past two days after getting rid of 55 day EMA decisively, breaking 1500 handle. The development now suggests that corrective fall from 1557.04 has completed at 1445.59 already, supported by 38.2% retracement of 1266.26 to 1557.04 at 1445.95.

                                Further rise should now be seen to retest 1557.04 first. Break will resume whole up trend form 1160.17, as well as that from 1046.37. Next target will be 61.8% projection of 1266.26 to 1557.04 from 1445.59 at 1625.29. As rise from 1445.59 could be the fifth leg of the five-wave sequence from 1160.17, we’d expect strong resistance from 1625.29 to limit upside to bring medium term correction.

                                WTI’s corrective rise sets to extend, for a short while

                                  By
                                  ActionForex.com
                                  -

                                  WTI crude oil jumps notably in Asian session today and it’s now back above 61 handle. With strong support seen from 4 hour 55 EMA, current rebound should be setting the stage for resumption of whole rise form 50.86, through 61.38 temporary top.

                                  However, we’d reiterate our view that such choppy rise from 50.86 should be corrective in nature, as part of the pattern that started back at 66.49. At this point, we don’t expect We don’t expect strong pick up in upside momentum with the next move.

                                  Indeed, WTI shouldn’t sustain above channel resistance for now and upside should be limited below 63.04 resistance. Meanwhile, break of 59.95 support should indicate short term topping and at least bring test on channel support (now at 56.83).

                                  US durable goods orders dropped -2%, second decline in three months

                                    By
                                    ActionForex.com
                                    -

                                    US durable goods orders dropped -2.0% mom to USD 242.6B, well below expectation of 0.2%. Headline orders was down in two of the last three months. Ex-transport orders was flat, missed expectation of 1.5% rise. Ex-defense orders, on the other hand, rose 0.8%.

                                    Full release here.

                                    Canada GDP posted first monthly decline in 8 months, by -0.1%

                                      By
                                      ActionForex.com
                                      -

                                      Canada GDP contracted -0.1% mom in October, below expectation of 0.1% mom. That’s also the first decline in eight months. Goods-producing industries had the second consecutive monthly decline, by -0.5% mom. Services-producing industries were essentially unchanged. Overall, 13 of 30 industrial sectors still posted growth in the month.

                                      Full release here.

                                      China lowers tariffs on 859 imports types to below MFN rates

                                        By
                                        ActionForex.com
                                        -

                                        China’s Ministry of Finance announced to cut import tariffs for range of products starting January 1. A total of 859 product types will enjoy provisional import tariffs lower than the Most-Favored-Nation (MFN) rates charged in 2020. The move aimed at meeting specific domestic demands but not totally related to US-China trade deal. The MOF also said that Goods from New Zealand, Peru, Costa Rica, Switzerland, Iceland, Singapore, Australia, South Korea, Georgia, Chile and Pakistan will have even lower levies under the re-negotiated free trade agreements with China.

                                        In particular, tariffs for frozen pork will be lowered from the MFN rate of 12% to 8%. Also, rate for frozen avocado will be lowered from MFN rate from 30% to 7%. Tariffs for some asthma and diabetes medications will be set at zero. Import tariffs on multi-component semiconductors will be cut to zero.

                                        Trump: Signing of giant China trade deal being arranged

                                          By
                                          ActionForex.com
                                          -

                                          US President Donald Trump said late Friday that he “had a very good talk with President Xi of China concerning our giant Trade Deal.” He noted that China has already started “large scale purchases” of US farm products. Formal signing of the agreement is “being arranged”. Both presidents also discussed the issues of North Korea and Hong Kong.

                                          While Trump is due to travel to Switzerland for the annual World Economic Forum in Davos at the end of January, Xi is not expected to be there. Hence, it’s an unlikely location for the signing. According to comments from US Trade Representative Robert Lighthizer, the 86-page trade agreement would be signed by him and Chinese Vice Premier Liu He in early January in Washington. The agreement is expected to come into effect 30 days afterwards.

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