Anchorage, Des Moines or London? Trade Troubles Ahead…

Bloomberg has reported overnight that the signing of the phase-1 US-China trade deal could be pushed back to until December. Ostensibly, disagreements over the signing location are to blame, with China’s President Xi underwhelmed by a trip to Iowa or Alaska. Not to disparage either fine state, but I can see his point, from a Chinese perspective both are effectively uninhabited. I’m sure inviting President Trump to sign the deal somewhere in Inner Mongolia, would have elicited the same underwhelming response. London has emerged as the favourite now after next month’s NATO meeting there.

The delay, though, maybe hiding deeper issues with the trade talks. Namely, the scale of tariff rollbacks and other conditions that China now feel they can demand from the US. Believing the US President is weakened, and thus more amenable to concessions is a dangerous game; President Xi needs to tread very carefully. President Trump is a game theory nightmare and is rumoured to have a high maintenance ego. Push too hard, and we could very quickly be back to square one.

The story was enough to stop equities in their tracks on Wall Street, although the financial markets generally, seem to be giving both sides the benefit of the doubt, for now. A good dose of reality will be beneficial for markets generally I believe, with pimped-up equity and energy prices running well ahead of the here and now. If a trade looks too good to be true, it always is, As previously highlighted, there is are plenty of potential trade talk risks between now and the eventual signing of part one.

There is not much to set the pulses racing in Asia today unless we get some more trade headlines. The data calendar is very light right through to European time. The highlight will be the Bank of England rate decision. It will undoubtedly remain unchanged at 0.75%. With both a general election and Brexit to contend with, the MPC will quickly adjourn for G&T’s and watch the show from the sidelines.


The possible delay in the signing of the interim trade deal stopped Wall Street’s rally in its tracks although it did not spur a rush for the exit door. Wall Street was mostly flat as investors took the Bloomberg story at face value, assuming it was merely an administrative delay. Time will tell if that is the case.

The S&P finished 0.07% higher to 3,076.74, the Nasdaq dropped 0.29% to 8,410.63, and the Dow Jones Industrial Average was flat at 27,491.34. Early indications are that Asia will follow the same pace, with the Nikkei, Shanghai Comp, Kospi, Hang Seng and Straits Times indices all flat on the day so far.

The potential delay in signing the interim trade deal, though, should be a warning shot that it is not necessarily a “done deal.”


Currency markets re-entered hibernation mode overnight with the G-7 currencies mostly unchanged. USD/JPY has continued to give back some of its gains though, falling back through 109.00 to 108.75 this morning.

The USD/CNH again fell overnight to retest the 6.9860 regions for the second day in a row, before rallying to 7.0110 at the New York close. It has since gained another 30 points to 7.0140 this morning. The price action suggests that the recent EM rally has also has run its course for now as well. Currency markets will likely need more clarity on the interim trade deal and a signing date before looking to push the past month’s rally forward.


Both Brent and WTI suffered noticeable pullbacks overnight as the trade agreement delay story and a massive rise in official US Crude Inventories to 7.90 million barrels, combined to sweep the carpet from under oil’s recent rally. The above expectation print from crude inventories was, in fact, signalled the day before by the unexpected rise of the API crude inventory data. Markets ignored it yesterday as the interim trade-deal story was still alive and well. As they say, timing is everything.

Brent crude spot fell 1.90% to $62.10 a barrel, and WTI spot fell $56.35 a barrel. Much like the equity and currency markets, oil has entered hibernation mode in Asia with both contracts unchanged in early trading. We expect this status quo to continue throughout the session. On a more positive note though, both Brent and WTI remain in well established technical up-trends on a monthly basis.


As I said yesterday, gold has looked offered at the bottom of its monthly range, and bid at the top of late. Yesterday was yet again, no exception, with gold jumping 0.50% to $1490.00 a barrel.

Interim trade deal nerves supported gold, and monthly support at $1475.00 and $1480.00 an ounce, will be a tough nut to crack while doubts remain. Gold is unchanged in Asia but should find haven-minded buyers on any dips today without seriously threatening the top-side.

This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.

Jeffrey Halley

Jeffrey Halley

Senior Market Analyst, Asia Pacific, from 2016 to August 2022
With more than 30 years of FX experience – from spot/margin trading and NDFs through to currency options and futures – Jeffrey Halley was OANDA’s Senior Market Analyst for Asia Pacific, responsible for providing timely and relevant macro analysis covering a wide range of asset classes. He has previously worked with leading institutions such as Saxo Capital Markets, DynexCorp Currency Portfolio Management, IG, IFX, Fimat Internationale Banque, HSBC and Barclays. A highly sought-after analyst, Jeffrey has appeared on a wide range of global news channels including Bloomberg, BBC, Reuters, CNBC, MSN, Sky TV and Channel News Asia as well as in leading print publications such as The New York Times and The Wall Street Journal, among others. He was born in New Zealand and holds an MBA from the Cass Business School.
Jeffrey Halley
Jeffrey Halley

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