China will never concede on `issues of principle' - Global Times / Trump: We are right where we want to be with China

Risk-off markets will likely to be the theme for the start of the week as weekend news comes in starkly in contrast to Friday's U.S. sessions trade optimistic close and price action where the DJIA managed to rally 500 points before the day was out, recovering from the start of the day's sell-off.

Ross J Burland FXStreet

There had been some optimistic wires flowing through from the top negotiating officials on Friday from the likes of Trump and China's vice premier Liu He both using the same language, that trade talks had been "constructive" and there were grounds for "cautious optimism".

However, over the weekend, we have a Global Times report entitled, China will never concede on `issues of principle' - Global Times. China's vice premier Liu He is reported to have said that China is planning how to retaliate. According to the Chief editor at the Global Times, Hu Xijin, reporting on Twitter, Liu He has listed three concerns that must be addressed before talks can move forward.

The complete removal of all trade-war related tariffs,
Set targets for Chinese purchases of goods in line with real demand and
Ensure that the text of the deal is “balanced” to ensure the “dignity” of both nations.

On the other side of the trade war negotiating table, following the weekend's earlier tweets:

I think that China felt they were being beaten so badly in the recent negotiation that they may as well wait around for the next election, 2020, to see if they could get lucky & have a Democrat win - in which case they would continue to rip-off the USA for $500 Billion a year.

The only problem is that they know I am going to win (best economy & employment numbers in U.S. history, & much more), and the deal will become far worse for them if it has to be negotiated in my second term. Would be wise for them to act now, but love collecting BIG TARIFFS!,

Trump has been making recent comments on trade as follows:

As a consequence, AUD is down - 0.06% at 0.6996, yen +0.14% vs the greenback at 109.79.

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.

AUD/USD flirts with 0.7000, lowest since early August amid bullish USD

AUD/USD hits a fresh low since early August during the Asian session on Friday and looks vulnerable near 0.7000 after breaking below the 200-day SMA overnight. Against the backdrop of the hawkish Fed, a two-day rally in oil prices revives inflation fears and continues to push US bond yields to multi-year highs. Adding to this, geopolitical risks lift the US Dollar to a two-month high, overshadowing RBA rate hike bets and weighing on the pair.

USD/JPY pulls back from three-week high after failing near 159.00

USD/JPY edges lower during the Asian session on Friday, stalling its recent strong move to a three-week high of 159.00 as Japanese Yen bears turn cautious amid intervention fears. Meanwhile, the US Dollar retains a strong bullish undertone as the Fed's hawkish outlook and oil-driven inflation fears continue to push US bond yields to multi-year peaks. Furthermore, the BoJ's dovish rate hike last week might cap JPY and support spot prices.

Gold treads water below $4,300

Gold grabs some buying attention and advances marginally at the end of the week, partially retracing the weekly decline, although it is still navigating below the key $4,300 mark per troy ounce. The fresh selling bias on the Greenback and the modest decline in US Treasury yields appear to support the humble advance in the precious metal.

Week ahead: Rate hike bets face a crucial data week

Despite the solid drop from the mid-September high, oil prices remained in the driver’s seat for another week, setting the tone in financial markets. Six months have passed since the late-February start of the US-Iran conflict, and there is still no breakthrough in the stalled talks, despite pressure from regional leaders and the rest of the world.

CFTC Report: Defensive currency positioning takes hold

The week in one sentence: Sterling and Euro shorts deepened in the week to September 22, while Yen longs were cut sharply. Oil positioning improved despite a steep price decline, and Gold exposure remained crowded. The main signal was a more defensive currency positioning backdrop.

Fed vs BoJ: Both hiked. The market only believes one of them – and the chart shows which

The Fed and the BoJ have just done something remarkably similar. Both central banks raised interest rates by 25 bps last week, both are confronting inflation risks, and both signal that future decisions will depend on incoming economic data.