There have been so many speculations about the ongoing trade talks between the United States and China. The worries heightened when the US passed a bill to support human rights in Hong Kong while also passing a second bill to stop the export of certain ammunitions to the Hong Kong police. This move didn’t go down well with China who issued a warning to the US to steer clear of its affairs.
Bearish sentiments took hold of the market when reports filtered in that the trade talks between the two macro economies have reached a stalemate. This was deduced from President Trump’s refusal to remove certain tariffs on Chinese goods while also threatening increased tariffs in case of a failed pact. The quantity of United States agricultural produce bought by china has also sparked up concerns.
Investors were neither sure of when the preliminary deal may be signed; reports gathered from inside sources at the white house said it might be moved to next year because China needed some reassurance on tariffs removal. A publication however quoting sources close to the white house reported that the trade talks have reached a deadlock.
Hopes were lighted again when in a Bloomberg interview, Chinese Vice Premier expressed optimism amidst caution as regards the ongoing trade talks between the two countries. He, however, added that certain ambiguities masked United States’ demands.
In the news wake, Australian and New Zealand dollar versus USD pairs started to hit recovery. At the time of this report, AUD versus USD stood at 0. 6798, recovered from a low price of 0 .6786 to stand at -0.05%. NZD versus USD traded at 0 .6413 edging higher from a low price of 0.6397 while standing at-0.07%.
On Wednesday, bearish sentiments had taken a hold of the AUD, NZD/USD pairs over the trade talks gridlock. The trend continued early Thursday and paused as both pairs held steady when the tensions about the trade deal seemed to douse for the moment.
The recent market situation as could be seen from the Japanese Yen and gold price in the early hours of today shows that heightened concerns over gridlock in the trade talks may have been unnecessary.
The slight bounce experienced by the AUD, NZD versus USD pairs also corroborates that the heightened concerns may have come too early.
Again the veracity of the reports which came in about the gridlock in the trade deal is questionable as the sources remained anonymous. A Shanghai trader said such reports are distractions while referring to the fact that the trade talks terms remain the same. He also made mention of the air of uncertainty hovering in the market causing a drag in trading.
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Azeez Mustapha is an experienced author, trader, markets analyst, signals strategist, and funds-manager.