The night brings white smoke over London – Commerzbank

FXStreet Insights Team FXStreet

An agreement was finally reached in the trade talks between China and the US in London in the middle of the night. As expected, the foreign exchange market did not react strongly to the news, Commerzbank's FX analyst Michael Pfister notes.

US-China trade deal reached, markets remain unmoved

"Firstly, as is often the case, the details are lacking, and the announcement merely clarified that the agreement reached in Geneva just four weeks ago will now be implemented more effectively. This means that no new improvements were achieved in the talks; only the tensions that have arisen since the last agreement have been defused."

"Secondly, this does not mean that tensions will not rise again in a few days. US trade policy is so erratic that no market participant can predict whether a far-reaching deal with China will prove more difficult to achieve than expected, including new tariff threats, in a few days' time."

"Given these prospects, I can understand why any market participant would break out in jubilation after the announcement and trade the US dollar significantly stronger."

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FXStreet Insights Team

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