China to buy more US energy, manufactured goods in trade deal – Politico

Ross J Burland FXStreet

Politico reports that China is to buy more US energy, manufactured goods in the trade deal.

Lead paragraphs

The trade deal to be signed this week will include pledges by China to buy $200 billion of U.S. goods over a two-year period in four industries, a Trump administration official and two people briefed on the matter said.

The target for manufactured goods purchases will be the largest, worth around $75 billion. China will also promise to buy $50 billion worth of energy, $40 billion in agriculture and $35 billion to $40 billion in services, the three people said.Analysts have speculated for weeks about what kinds of purchases China could make in these sectors.

“Energy products are specifically mentioned in the section on ‘Expanding Trade’ in the fact sheet produced by the USTR on Dec. 13, 2019,” said Moody’s Analytics chief Asia-Pacific economist Steve Cochrane. “So it seems like a good possibility to be included in the details of the phase one agreement to be signed on Wednesday.

FX implications

We are seeing USD/JPY rally to the highest levels since May 2019. Markets are risk-on due to the sentiment for improved relations between the US and China.

USD/JPY takes on 110 handle for first time since May

Author

Ross J Burland

FXStreet

Ross J Burland, born in England, UK, is a sportsman at heart. He played Rugby and Judo for his county, Kent and the South East of England Rugby team.

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