Much Needed Movement on the US China Trade Talks Starting to Filter through News Wires

Xe Corporate Europe

November 27, 20193 min read

President Trump and Chinese officials having spoken directly, and POTUS tweeting that progress is being made ahead of an absolute agreement on a new tariff programme. The currency markets clearly looking for this direction especially for the USD. Consequently, the Greenback has edged higher on a trade weighted basis. This was after poor data overnight in the USA that pointed to a further slowdown in the economy. But akin to the situation in the U.K. momentarily; it’s geopolitical risks that Currency markets are focussed upon. Better news for U.K. exporters of goods and services, with GBPUSD back into the low 1.2800’s.

The big news overnight from Asia Pacific Is the continued weakening of the Aussie Dollar. This was fuelled by a strategy call from local Westpac Economist Bill Evans; two central bank interest rate cuts and the potential for quantitative easing in 2020. Australia as a major exporter and trade partner of China's industrial firms will also be concerned by further detractions in Chinese data. The Aussie continues to lose investors down under. But GBPAUD has moved lower across yesterday and Asia. More from GBP negativity than anything else.

Speaking of which it’s back to the, “will they, won’t they?” approach to a Conservative party majority at the U.K. election. As we mentioned on these pages, Currency markets seem to eye every poll for the next direction for the Pound. And yesterday’s narrowing of the Tory lead, has commentators looking once again at how the 2017 election and polls played out. All eyes this evening will be on the YouGov MRP regression model poll. It could be a good indicator. Discussions focus in the North East and the first released result in Sunderland. That was the Brexit referendum key indicator. Could the same play out in this election?

As a result, GBP has traded lower across the board over the past two sessions. Nervousness is starting to creep in, which of course is good news for the exporting community. The news from a variety of sources is becoming increasingly opaque and difficult to read. Is this the new paradigm as we run up to voting day?

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