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

EUR/USD flirts with 1.1100 as the dollar loses steam

The EUR/USD pair bounced from a daily low of 1.1065, as demand for the greenback receded during US trading hours. Upside caped for the shared currency amid fears of a German recession, Italian political turmoil.

EUR/USD News

GBP/USD losses upside momentum at the start of the key day

While optimism surrounding soft Brexit helped the GBP/USD pair to rise on the previous day, the Cable retraces to 1.2165 amid initial Wednesday morning in Asia. The UK PM’s visit to Germany will be closely observed.

GBP/USD News

USD/JPY: bears moving back to the front

Demand for safe-haven assets picked up in the American session. US 10-year Treasury note yield fell to 1.54% intraday, settles barely above. USD/JPY to resume decline on a break below 106.05, a Fibonacci support.

USD/JPY News

Gold: Bulls cheer pullback from 10-day EMA

Following its successful bounce off 10-day exponential moving average (EMA), Gold takes the bids to $1507 during the early Asian session on Wednesday. The yellow metal now heads to Friday’s high around $1528 ahead of questioning the monthly top surrounding $1535.

Gold News

Top 3 Price Prediction Bitcoin, Ripple, Ethereum: Planning the next bullish move after consolidating gains

Trading cryptos is not a one-way street – meteoric unstoppable gains belong to the past. Nevertheless, the bullish sentiment seems to prevail. Digital coins advanced on Monday and are consolidating on Tuesday. 

Read more

MAJORS

Cryptocurrencies

Signatures


  •  
  •  
  •  
  •  
  •