The Chinese government spoke in favor of reaching a trade agreement with the United States. Last week, the US unveiled plans for a “phase-1” preliminary deal and postponed previously scheduled tariffs. Now, China claims that they want to continue with this phase-like approach until the two largest economies in the world can reach a solid trade agreement, which would benefit everyone.
Nevertheless, the phase-1 agreement is not yet finalized. Negotiators are hoping to get their respective presidents to sign a legally binding text in November, while continuing to work on the next phase. While hopes of an agreement persist, expect higher risk appetite on the markets.
Meanwhile, there was big news in Europe, where UK Prime Minister Boris Johnson and EU Commissioner Jean-Claude Juncker almost simultaneously announced they have successfully reached a new withdrawal agreement. However, the exact nature of the deal is still a secret.
Johnson will attend the EU summit that begins today, where the deal will be unveiled. Juncker urged EU leaders to accept the deal. Nevertheless, whether the new agreement succeeds depends more on how it fares in the UK Parliament. After all, the EU backed Theresa May’s agreement, but that failed to gain support domestically. The next three days will be key.
As a result of the announcement, the British pound stabilized against the dollar.
