China Economic Update and Outlook
Executive Summary
China continues to lead the world in the containment of COVID as new confirmed cases are minimal. This apparent success can likely be attributed to early lockdown protocols, significant testing and other healthcare procedures designed to mitigate the spread of COVID, allowing for the economy to re-open...
Dollar Softens Mildly as Focus Turns to FOMC Statement and Projections
Dollar trades generally soft in Asian session but losses are so far limited. The greenback is actually still staying above last week's low against all but Yen and Kiwi. Major focus will turn to FOMC today and traders could finally commit to a direction, after getting Fed's new economic...
US drops tariffs on Canadian aluminum, Canada drops retaliation threat
The US Trade Representative said it will drop the 10% tariffs on Canadian non-alloyed, unwrought aluminum, retroactive to September 1. The tariffs were reimposed in August due to a surge in import earlier this year. But USTR expects the volume to normalize back to 70k to 83k tons a...
Sunset Market Commentary
Markets
Stock markets started the day once more on a solid footing. An upbeat statement on the implementation of the US-Sino phase one trade deal did the trick. Main European indices opened over 1% in positive territory, but failed to take out additional gains. Core bonds immediately traded a bit...
Euro Rises on German Data, Yen Tumbles Broadly
European majors, as well as stock indices, are boosted by better than expected Germany business sentiments, as well as small than expected Q2 GDP contraction. There were talks that investors welcomed the US-China trade phone calls. But judging from the decline in China and Hong Kong stocks, that might...
Stocks Rise On Trade Talks, German Data, And Stimulus Prospects, Oil Rises Ahead Of Laura, Gold Slumps
US stocks and European equities opened higher after both US and Chinese trade negotiators spoke, reaffirming their commitments to ensuring the success of the phase-one trade agreement and as German businesses confidence improves and Merkel’s government readies the extension of their state wage-support program. Despite all the recent positive...
S&P 500 Hit Record, Forex Markets Yawn in Range
Coronavirus vaccine optimism sent US stocks to record high overnight but the positive sentiments are not carried forward to Asia. The forex markets are also treading water, with major pairs and crosses stuck inside last week's range. US and Canadian Dollars are the relatively weaker ones while European majors...
USTR said progress made in US-China trade deal implementation
US Trade Representative Robert Lighthizer and Treasury Secretary Steven Mnuchin finally held a "regularly scheduled call" with Chinese Vice Premier Liu He to review the progress of the implementation of the trade deal phase one.
USTR said in a statement, the parties addressed steps that China has taken to "effectuate...
Sunset Market Commentary
Markets
European equities convincingly reversed the disappointment after Friday’s unexpected sharp setback in the EMU August PMI’s. The second wave of the corona pandemic threatens slowing the restart of the European economy, in particular in the services sector. However, equity investors again see the glass half full. Headlines on optimism...
Week Ahead – Markets to Stay Choppy ahead of Virtual Jackson Hole Symposium
The Federal Reserve will be front and centre next week as traders will be hoping policymakers will provide clearer signals on future monetary stimulus than they did in the FOMC minutes when they hold a virtual gathering of their annual economic symposium. Data out of the United States will...
Weekly Focus – Uncertainty About Policy Support Hits Global Equity Markets
The COVID-19 virus continues to create headwinds for many countries. While the second wave appears to have peaked in hotspots such as the US, European countries are struggling with rising numbers of cases amid the travelling season. In Spain, France and Germany, the numbers of new cases are back...
Sentiments Turn Cautious after ECB and Fed Minutes, Aussie and Kiwi Tumble
Global financial markets seemed to have turned into risk-off mode today, after both Fed and ECB sounded very cautious regarding economic outlook in their minutes. Swiss Franc extended recent volatility trading and gains broadly, followed by Sterling and Yen. On the other hand, New Zealand Dollar completed this week's...
China said there will be trade talks with US in coming days
Chinese Commerce Ministry spokesman Gao Feng said at regular press briefing that China and the US have agreed to hold trade talks "in the coming days" for evaluation on the implementation of the phase 1 trade deal. However, there was no further elaboration on the details of the meeting,...
Dollar Breaks Near Term Support, Starting Another Leg in Down Trend
Dollar's selloff accelerates entering into US session, taking out recent lows against all major currencies except Yen. Another leg in the near term down trend has started. Swiss Franc and Yen are the next weakest, together with New Zealand dollar. On the other hand, Sterling and Euro are both...
Australia trade minister: China’s anti dumping investigation disappointing and perplexing
Trade dispute between China and Australia heightens after China's Ministry of Commerce indicated it had decided to initiate the anti-dumping investigation into Australia's wine industry. Australia Trade Minister Simon Birmingham hit back and criticized the move as ''disappointing and perplexing"
Birmingham said, "Australian wine is not sold at below market...
An Uneventful Start to the Week
A subdued start to trading on Monday, with stocks in Europe relatively flat and US futures marginally in the green ahead of the open.
So far it's been relatively light on the data side of things, with Japanese GDP the only real highlight. Worst ever contractions don't really carry the...
Euro Mildly Higher in Mixed Markets, Kiwi Down as Election Postponed
Euro strengthens mildly in generally mixed Asian markets today. There is no clear direction as Japan stocks diverge from others while gold and oil are rangebound. Canadian and Australian Dollar are following as the next strongest but movements are limited. Yen and Dollar are trading with an undertone. But...
UK Liz pledges to fight to consign unacceptable and unfair US tariffs
UK Trade Minister Liz Truss wrote in a Telegraph op-ed that US tariffs on Scotch whisky are "unacceptable and unfair". "I cannot be clearer about that," she added. "Whisky-making is one of our great industries and a jewel in our national crown." Truss pledged to "fight to consign these...
Weekly Focus – Market-Based Inflation on the Rise and Rising Global Yields
The COVID-19 spreading seems to have finally peaked in hot spots such as the US but, at the same time, we observe local/regional outbreaks. In many European countries, such as Germany, France, Belgium, the Netherlands, the UK and Denmark, the number of new cases has moved slightly higher, although...
Euro Higher in Consolidative Markets, Yet to Break Resistance Against Dollar
European majors turn slightly stronger today, in mixed markets. Euro appears to be supported by news that US is refraining from tariffs hikes on Airbus subsidies retaliation. Though, except versus Yen, Euro's strength is not too convincing yet. Dollar turns soft again following strong rally in US stocks overnight....
US holds off tariff hike on EU, to start new negotiations instead
The US held off from a threatened tariff hike on EU products regarding the 16-year Airbus subsidies dispute, and signal its willingness to go back to negotiation table. The amount of products subject to the tariffs are kept unchanged at USD 7.5B, with 15% rate for aircraft and 25%...
US China Trade Agreement 1st Half Review – A Fail?
At the 2020 half way mark, China is on a run rate to meet just 20% of its energy product obligations; 47% of agricultural and 57% of manufactured goods purchases for a total of 48% of its overall 2020 targets under the terms of the Phase One Trade Agreement....
Forward Guidance: Expiration of Policy Supports, Unpredictable US Trade Policy Cloud Outlook Despite Sunnier Data
Early economic data from the recovery should continue to be upbeat over the next week. Persistently strong residential building permit issuance means Canadian housing starts probably ticked up in July from the 212k annual rate in June after not slowing much during the downturn (outside of Quebec where residential...
China’s Trade Surplus Widened in July, Trade Deal Review Next Week In Focus
China’s trade data surprised to the upside in July. This was mainly driven by strong exports, offsetting decline in imports. Exports gained +7.2% y/y in July, following a 0.5% increase a month. This has beaten consensus of a -0.6% drop. From a month ago, exports rose +5.7$, after climbing...
Research China: At the Foothills of a New Cold War – and What It Implies
A new cold war between the US and China may already be here but it is set to be different from the first cold war between the western world and the Soviet Bloc.
We expect a further decoupling between the US and China in terms of technology, investments...
US China Trade Agreement Update – Not Impossible?
China is currently set to meet just 14% of its energy product obligations; 45% of agreed agricultural; 57% of required manufactured goods for a total of 45% of its overall 2020 targets under the terms of the Phase One Trade Agreement. A period of much increased trade tension between...
Markets in Full Risk On, Dollar Tumbles While Euro Surges
Powerful rally in Chinese stock markets push global equities sharply higher today. Europeans indices are all in black, DOW future is up nearly 400 pts while NASDAQ is set to extend record run. Yen and Dollar are both the worst performing ones in risk-on markets. Euro is the strongest...
EU Hogan pledged to act decisively and strongly if US doesn’t want to settle airbus dispute
EU Trade Commissioner Phil Hogan told European Parliament's that the US had twice rejected EU's proposal to settle the 15-year old dispute regarding Airbus subsidies. He added that the commission will take decisive actions against the US.
He said, "I want to reassure people that we are ready to act...
Risk Reversal Building Up on Coronavirus and US-China Tensions
The conditions for risk reversal continued to build up last week and somewhat intensified. On the one hand, daily new coronavirus cases surged to new high for the world world, as well as for the US. Daily global new deaths were steady and the US death tolls trended down....
Forward Guidance: Trade War Redux?
The Trump administration will once again consider tariffs on Canadian aluminum imports if Ottawa refuses to impose export restrictions on the metal, reports suggested this week.
A May 2019 agreement that put an end to earlier tariffs allowed for those 10% duties to snap back if imports “surge meaningfully beyond...