It seems that the positive results of the months-long negotiations between the United States and China on trade have reached an impasse. Last weekend, the American president has once again attacked the PRC with new-old threats, which could introduce tariffs on Chinese goods worth $ 200 billion this week.
According to the established tradition, Trump tweeted that "trade negotiations with China continue, but too slowly, because they want to change the agreement." All this indicates that the US side is not able to push through new trade agreements on its own terms. The chief negotiator for the United States, R. Lighthizer, said that the negotiation process had stalled, which seemed to have outraged Trump, leading him to launch a new threat to the Chinese. The president said that he could "in the near future" introduce a 25% tariff on goods for another 325 billion dollars, which in fact concerns almost all Chinese goods imported to the USA. Earlier he "generously" stated that while negotiations are underway, the state duty on imported goods will remain at around 10%.
Naturally, in the wake of this news today, there is a sharp drop in the Chinese stock market. Major local stock indexes fell from 5.00% to 7.20%. Futures for the top three major US stock indices declined from 1.66% to 1.99%. The leader of the fall is the high-tech NASDAQ, since a significant number of companies whose shares are traded in this sector, produce their products in China. The fall in futures indicates that the US stock market is more likely to open in negative territory.
In general, watching the events taking place, we note that the failure of negotiations between Washington and Beijing will lead to severe disappointments in the markets and will be the main negative factor that will put downward pressure on stock indices, crude oil quotes and other commodity assets, first of all production goods .
On this wave, the fall in commodity and commodity currency quotations may continue. First of all, we expect the resumption of the fall of the Australian and Canadian dollars, as well as the growth in demand for defensive assets, including the Japanese yen.
Forecast of the day:
The AUDUSD pair is still above the local low of 0.6980, and overcoming the continued negativity can lead to further decline to 0.6900.
The USDCAD pair has approached a strong resistance level of 1.3500, the overcoming of which will be a signal to buy, and against this background it can continue to climb to the upper boundary of the short-term upward trend of 1.3620.
