Relief on the US-China trade front could be short-lived – UOB


Researchers at UOB Group assessed the recent announcements from the White House to delay tariffs on some Chinese products.

Key Quotes

“US President Trump sprung another surprise by delaying the 10% tariff on some of the US$300bn Chinese goods that were to become effective from 1 September. This was reportedly after a phone conversation between China Vice Premier Liu He and US Trade Representative Robert Lightizer and Treasury Secretary Steven Mnuchin on Tuesday (13 August)”.

“President Trump’s motivation for delaying some of the tariffs is largely driven by domestic consideration. According to President Trump, the delay is in order not to affect consumers ahead of Christmas shopping while we think that US will also want to contain the fallout from the trade tensions as it heads into election next year”.

“Despite the de-escalation in US-China trade tensions, a breakthrough does not appear to be forthcoming yet. The risk of full implementation of the 10% additional tariff on the US$300bn list of goods in December and even further increases in the tariff rate will remain if both parties are not able to resolve their differences through negotiation. At the current juncture, the progress is impeded by lack of consensus on key issues including compliance/enforcement of any agreement, structural issues such as intellectual property protection, technology transfer etc. The weakening Chinese currency is also another contentious issue after the US Treasury labeled China as a currency manipulator on 5 August”.

“Our base case scenario (60% probability) remains that of protracted trade negotiation leading to some eventual trade deal as both sides are still locked in discussion while we continue to see the probability of our Worst Case scenario of an all-out trade war at 30% given the expansion of the US’ tariff from 1 September”.

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

AUD/USD stays under pressure around 0.6830 while beginning the NFP day

AUD/USD declines to 0.6830 during the initial Friday morning in Asia. The quote stretches losses made on Thursday as the second-tier Aussie data becomes the latest disappointment.

AUD/USD News

USD/JPY steady at 200-DMA ahead of critical US NFP data

Steady below the 200-day moving average, Yen fell from 108.97 to 108.66 overnight as positive trade deal headlines flowed through the news wires and helped US stocks eke out further gains. Risk appetite was solid into the close on Wall Street overnight.

USD/JPY News

US Non-Farm Payrolls November Preview: Labor market continues to defy concerns

Non-farm payrolls are predicted to rise 180,000 in Nov following Oct’s 128,000 increase. The unemployment rate is expected to be unchanged at 3.6%. Hourly earnings will gain 0.3% in Nov after October’s 0.2% increase and annual earnings will be stable at 3.0%.

Read more

Gold: Modestly changed to $1475 as markets turn cautious ahead of US NFP

Gold fails to extend the previous day’s recovery while trading near $1475/76 amid Friday’s Asian session. That said, the yellow metal registers failures to close beyond 50-day EMA for the third consecutive day.

Gold News

GBP/USD: 1.3180 holds the key to further upside

GBP/USD traders modestly changed around 1.3160 by the press time of early Asian session on Friday. That said, overbought conditions of the 14-day Relative Strength Index (RSI) and the recent stop in north-run make buyers doubtful.

GBP/USD News

Forex MAJORS

Cryptocurrencies

Signatures