analytics

Traders expect real steps in the US-China truce

On June 28-29 at G-20 Summit, there was a shift in relations between China and the United States: the heads of state began a dialogue on an armistice. Global stock and financial markets have been closely following the development of the conflict between China and the United States since June 2018. The trade war has been going on for about a year.

The deterioration of relations between Beijing and Washington affected the whole global economy. The latest economic indicators of the two countries indicate a slowdown in China’s economy and some problems in the United States (a decrease in the number of jobs, a weak increase in consumer spending, and a fall in business investment). EU countries are equally experiencing the negative effects of a trade war. The European Central Bank (ECB) announced that it was prepared to stimulate the eurozone economy additionally if it is necessary.

Hope for the completion of the economic confrontation appeared at the meeting of the G-20. Trump and Xi Jinping have agreed not to introduce new tariffs but have not yet canceled the existing taxes. After negotiations, the dollar began to strengthen and on July 1 rose 0.3% against the yen. The dollar index also began to move up: DXY was up 0.5% against a basket of 6 major currencies. Prices per barrel of oil also rose by 2.5%, while gold futures lost 1.3%.

Despite the increase in activity in the stock and currency markets, as well as the resumption of dialogue, analysts expect clearer conditions for a truce and when the countries put the words into actions.