China: What’s next after the trade talks - ING


According to Iris Pang, Greater China Economist at ING, China's September trade data, released earlier this Monday, reflects increasing damage from the trade war. Pang provided a brief analysis if this could change after the recent trade talks and also offered an outlook for the Chinese yuan.

Key Quotes:

China said it had made "substantial progress" with the US after Friday's meeting and again emphasised that "respect" is the key to future successful trade negotiations.
 
Still, there is a five-week period for the two sides to write down exactly what they agreed to in the meeting. This raises questions about how much "progress" has really been made. We think there are probably some important disagreements on the terms of a deal, which could include the yuan mechanism.
 
A statement is scheduled to be released in November. The timing is important because planned US tariffs are due to go into effect in December, hitting an additional $160 billion of Chinese-made consumer goods. If the two sides cannot release a draft agreement as planned in five weeks, it will not bode well for a trade truce.
 
China has always stated that the yuan mechanism is being reformed but we don't think it will announce any significant changes to this in the draft statement. Still, the US is likely to continue to press China to appreciate the yuan, and this issue will make future negotiations tough.
 
The recent appreciation of the yuan is really just a result of the weak dollar rather than any deviation from the trend. We therefore do not think that the USD/CNY will fall below 7.0. Our forecast for 2019 year end is still 7.20.

Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility.

Feed news

Latest Forex News

Editors’ Picks

EUR/USD holding onto range amid trade tensions, ahead of FOMC minutes

EUR/USD is trading above 1.1050, within familiar ranges. The US Senate's support of Hong Kong protesters has aggravated tensions with China. The Federal Reserve's meeting minutes are eyed.

EUR/USD News

GBP/USD is on the back foot after the Johnson-Corbyn debate

GBP/USD is trading closer to 1.29, after Labour leader Corbyn beat expectations in his debate with PM Johnson. Further opinion polls are awaited. 

GBP/USD News

USD/JPY: rising bets for a test of 108.00

The bearish note in USD/JPY stays well and sound so far this week. US-China trade concerns, Honk Kong turmoil add to JPY-buying. FOMC minutes will be the salient event later today.

USD/JPY News

Gold climbs to near 2-week tops, beyond $1475 supply zone

Gold edged higher through the early European session on Wednesday and climbed to near two-week tops, just above the $1475 region in the last hour.

Gold News

FOMC Minutes October 29-30 Preview: Reinforcing the rate pause

The completion of the Federal Reserve’s “insurance policy”, so named by Chairman Powell, has bought the base rate to 1.50%-1.75% where it was a little more than a year ago on the first of May 2018.

Read more

Forex MAJORS

Cryptocurrencies

Signatures