Last Friday, the United States and China announced the beginnings of a preliminary trade agreement. According to their current negotiations progress, the United States will hold off on new tariffs on Chinese goods that were supposed to take effect this week, while China has agreed to buy $50 billion worth of agricultural products from the US.
Nevertheless, market analysts remain pessimistic about a trade agreement being successfully reached. Not only have the two countries failed after a whole year of talks, but it might not be in Trump’s political interests to solve the issue with China. In 2016, Trump largely ran on a platform about building a wall, but three years into his presidency, he still hasn’t managed to build one. In 2020, he could run a campaign centered around China instead.
Still, the news was good for the Chinese yuan, as well as risk appetite on the markets.
The British pound today emerges as one of the notable losers on the Forex market. At the end of last week, there was suddenly hope, after Leo Varadkar spoke in a surprisingly positive tone about his negotiations with Boris Johnson. However, the EU continued the talks over the weekend, only to find that the proposals are still unfeasible. Moreover, Johnson’s deal would have an even worse impact on the UK economy than Theresa May’s, according to the latest estimates.
Meanwhile, Turkey’s military operation in Syria continues, despite strong international criticism. The EU wants to impose an arms embargo, while Trump has threatened Turkey with tariffs. While the EU may act, analysts are doubtful that Trump will do anything meaningful regarding Turkey. The Turkish lira weakened regardless.
