Trump Considering Lifting Tariffs
With the growing economic threat from COVID-19 demanding an increasing response from central banks and governments alike, the US administration is reportedly on the verge of a surprising U -turn. According to the Financial Times, the President is set to announce a 90-day suspension on some Chinese imports such as apparel and light trucks.
Some tariff exemptions have already been made in recent weeks with restrictions lifted on medical supplies as the US rushed to import large numbers of protective equipment and other medical goods.
However, the US is now considering lifting tariffs on a broader basket of goods to help support the domestic and global economy during the current drop in demand. However, the Financial Times is reporting that the tariff exemptions the US is considering do not pertain to some of the more high-profile tariffs applied by the President.
China itself looks to be turning a corner in terms of the economic destruction caused by the virus. In March, the Chinese manufacturing sector was seen recovering to 50.1, following a plunge over the prior month to record lows of 40.3. The Chinese response to the virus, which saw swift and largely Draconian measures implemented, helped to quickly contain the virus. In Hubei province, the epicentre of the virus’ outbreak, restrictions on movement have now been eased following months of stringent lockdowns.
China Beats US on Q1 Deals
Chinese asset markets have also been rebounding firmly. According to data released by Dealogic, initial public offerings and secondary listings on the main Chinese exchanges raised over $ 11 billion in Q1 across 50 deals. This beat the $ 10.5 billion raised in the US, across only 37 deals. This is the first time this dynamic has been seen since 2016 and reflects the heavy negative impact from COVID-19 in the US.
With the US and China both heavily occupied in their efforts to stop the virus, further trade negotiations have been placed on hold for now. Following, the signing o the phase one trade deal on January 15th, the two countries have yet to announce a timeline for the next round of talks, aimed at delivering a phase-two trade deal. Given the ongoing battle against COVID-19 and the US general elections due in November, it seems reasonable now to expect that talks will likely take place much later in the year, potentially after the US elections.
USDCNH (Bullish above 7.0570)
From a technical viewpoint. USDCNH is testing the upper limit of the contracting triangle pattern which has marked the consolidation formed following the break above 7.0570. While above here, and with VWAP still positive, the bias remains for a continued push higher with the 7.1966 level the next topside marker to watch.
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