US to make it easier for diplomats to meet Taiwanese officials – FT

Anil Panchal FXStreet

While adding to the US-China tussle story, the Financial Times (FT) came out with the news saying, “The Biden administration is preparing to issue guidelines that would make it easier for US diplomats to meet Taiwanese officials by adopting some of the changes introduced by Donald Trump.”

The early Tuesday news also states that such a move will provoke China while mentioning that the original restrictions on meetings were introduced after the US switched diplomatic recognition from Taipei to Beijing in 1979. However, in January, Mike Pompeo, then secretary of state, rescinded many of the restrictions after Congress in December passed the Taiwan Assurance Act, which mandated a review within 180 days.

It’s worth mentioning that a different story suggests the US and Japan are likely to take note of Taiwan during their recent negotiations.

FX implications

Given the escalation in the Western drive to battle China over multiple issues, recently backed by Japan, risk-off mood should gain momentum. However, vaccine optimism and stimulus hopes seem to keep the markets mostly dry ahead of this week’s US employment report.

Read: S&P 500 Futures reverses early Asia gains amid mixed clues, strong US Treasury yields

Author

Anil Panchal

FXStreet

Anil Panchal has nearly 15 years of experience in tracking financial markets. With a keen interest in macroeconomics, Anil aptly tracks global news/updates and stays well-informed about the global financial moves and their implications.

GBP/USD surrenders some gains, back to 1.3420

GBP/USD holds on to moderate gains above 1.3400 the figure on Friday. Optimism surrounding the UK government’s leadership transition and expectations of further BoE tightening support the British Pound, while easing tensions in the Middle East and fading Fed rate-hike expectations weigh on the US Dollar.

EUR/USD turns positive, targets 1.1450

EUR/USD now picks up pace and advances toward the 1.1440 region on Friday, up modestly for the day. With no major economic data due, lingering uncertainty over the US-Iran conflict keeps investors cautious, limiting the pair's upside.

Gold remains offered, still below $4,100

Gold struggles to extend Thursday’s rebound and navigates below the $4,100 mark per troy ounce on Friday. Uncertainty surrounding the Middle East conflict limits the precious metal’s upside, which is also under pressure amid rising US Treasury yields across the curve.

Week ahead – US CPI and Warsh testimony to take centre stage, BoC eyed too

US inflation report and Warsh testimony to headline the week. Dollar to dominate amid slew of other US data and Mideast tensions. Amid fresh Iran escalation, China GDP to shed light on Q2 impact. Bank of Canada not expected to follow RBNZ with rate hike.

Five sessions, one round trip: Why the whipsaw is exactly what Warsh ordered

Markets opened July with a December hike as the base case and spent five trading sessions unlearning and relearning it. A 57K payrolls print bled the tightening bets out of the strip; a re-shut Strait of Hormuz is pushing them back in. Wednesday's minutes from the June Federal Open Market Committee meeting landed mid-round-trip, describing a world that had already stopped existing.

Five sessions, one round trip: Why the whipsaw is exactly what Warsh ordered

Markets opened July with a December hike as the base case and spent five trading sessions unlearning and relearning it. A 57K payrolls print bled the tightening bets out of the strip; a re-shut Strait of Hormuz is pushing them back in. Wednesday's minutes from the June FOMC meeting landed mid-round-trip, describing a world that had already stopped existing.