Geopolitical Trends: UK Election, US-China Tariff Retreat and FOMC Rate Decision Sways Risk Sentiment

Geopolitical Trends: UK Election, US-China Tariff Retreat and FOMC Rate Decision Sways Risk Sentiment

Monetary information will slow towards the end of the year, even though there are still a few important events planned for the new week.

Business sectors were shaken by the major events a week ago, the United Kingdom elections, the decline in tariffs between the United States and China, and the FOMC decision. The British pound ended as the most grounded at the end of the previous week as supported by the Conservative victory in the UK political elections, which led to the expulsion of fragility from Britain’s exit from the European Union. The Canadian dollar has sought to drive up the price of unrefined oil, mostly supported by a lower tariff between the United States and China. The Yen was the weakest in light of the strong risk appetite as US stocks expanded their record range. The dollar sought as the second weakest after Federal Reserve Chairman Jerome Powell played down the opportunity of any interest rate hike later, indicating that the interest rate will remain at the current level unless there is a material daze in expansion.

We accept that many speculators were upset with the “slight” tariff retreat that the American – Chinese tariff retreat brought on.

An enormous portion of the weakness of Britain’s exit from the European Union should now be excluded as Boris Johnson is set to restore the withdrawal bill for discussion in the House of Commons before Christmas and entry before Britain’s January 31 deadline. Likewise, he also pledged not to widen the timeframe for progress beyond 2020, only 11 months to end the UK and European Union exchanges on future relations, including trade. This is a fairly tight schedule, but for the time being, the British Pound bulls have every reason to move forward with the bullish bias in the market at the beginning.

Apprehension in the Market over Slight Tariff Retreat
The completion of the first phase of the US-China trade deal was yet another strong boost for the business sector. In line with the fact sheet by the United States Trade Representative, the understanding could include areas that include protected innovation, transfer of innovation, agribusiness, money-related businesses, currency, trade growth, and challenges resolution. Robert Lightizer said he expected the 86-page understanding to be signed by him and Chinese Vice Premier Liu He in early January in Washington. The main points will be discharged at that point.

One of the important things to note is that the business sectors seem especially disappointed due to the tariff rollbacks. The positive news was that the fees set at $ 160 billion in all mainly Chinese non-taxable products have been suspended indefinitely. A 15% fee on the $ 120 billion Chinese import tranche will be split into 7.5%. However, the 25% tax on products worth $ 250 billion is left unaltered. This means that the tariff situation is not fairer than it was half a year ago.

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Author : Azeez Mustapha

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Azeez Mustapha is an experienced author, trader, markets analyst, signals strategist, and funds-manager.