{"id":150847,"date":"2019-07-03T12:57:29","date_gmt":"2019-07-03T16:57:29","guid":{"rendered":"https:\/\/www.countingpips.com\/?p=150847"},"modified":"2019-07-03T12:57:29","modified_gmt":"2019-07-03T16:57:29","slug":"g20-will-the-trade-truce-last","status":"publish","type":"post","link":"https:\/\/www.investmacro.com\/forex\/2019\/07\/g20-will-the-trade-truce-last\/","title":{"rendered":"G20: Will The Trade Truce Last?"},"content":{"rendered":"
July 3, 2019<\/div>
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Trump and Xi Take Centre Stage<\/strong><\/h2>\n<\/div>\n
\"trade\"<\/a><\/div>\n<\/div>\n
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The G20 summit held in Japan last weekend<\/strong>\u00a0was once again upstaged by the\u00a0meeting which took place along the sidelines\u00a0between Trump and Chinese premier Xi Jinping.<\/strong><\/div>\n<\/div>\n
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The fresh outbreak of tariff increases between the two main global economies had sent equities plunging. And the market was hoping that the leaders would come to an agreement as they had done at the end of 2018 in Argentina.<\/p>\n

Trump Agrees to Refrain From Further Tariffs<\/strong><\/h2>\n

Fortunately, these hopes were not in vain.\u00a0Trump and Xi were able to quell rising investor uncertainty with a new pact.<\/strong><\/p>\n

Following the meeting between the two leaders, Trump told reporters:<\/p>\n

\u00a0\u201cWe\u2019re right back on track. We\u2019ll see what happens.\u201d<\/p><\/blockquote>\n

Trump added that\u00a0the pair had agreed to re-commit to trade negotiations.\u00a0<\/strong>The President also removed the\u00a0cloud that has been hanging over the markets recently by confirming\u00a0that he would not be tariffing the remaining $300 billion of Chinese goods entering the US each year.<\/strong>\u00a0He stated:<\/p>\n

\u201cI promised that, for at least the time, being we\u2019re not going to be lifting tariffs on China. We won\u2019t be adding an additional tremendous amount \u2013 we have $350 billion left that could be tariffed, taxed \u2013 we\u2019re not going to be doing that.\u201d<\/p><\/blockquote>\n

Trump Unexpectedly Backpedals on Huawei<\/strong><\/h2>\n

While many were hoping for some compromise over tariffs, the market was surprised by Trump\u2019s change of heart over Huawei.<\/strong>\u00a0Back in May, Trump had added Huawei<\/a>\u00a0to the \u201cEntity List,\u201d a list of companies which US firms are prohibited from dealing with without government approval.<\/p>\n

The move was a major blow to the Chinese firm and markets reacted fearfully with heavy selling in equities. However, at the meeting with Xi,\u00a0Trump declared that \u201cUS companies can sell their equipment to Huawei.\u201d<\/strong><\/p>\n

In return, China agreed to purchase a \u201ctremendous amount\u201d of US food and agricultural products.<\/p>\n

Trump Makes History & Meets Kim In North Korea<\/strong><\/h2>\n

In a further surprise twist, after the summit,\u00a0Trump broke historic ground by becoming the first US president to set foot on North Korean soil.<\/strong>\u00a0Following a spontaneous tweet where Trump suggested the possibility of the two leaders meeting, Kim extended the invitation to Trump.<\/p>\n

The two leaders met at the demilitarized zone. Kim then escorted Trump for a short distance onto the North Korean side.\u00a0The display has buoyed the markets and is an\u00a0encouraging sign for Trump trying to achieve de-nuclearization of North Korea.<\/strong><\/p>\n

Equities are firming in response to news that the two leaders might meet again soon.<\/strong><\/p>\n

Market Soars on Trade War Optimism<\/strong><\/h2>\n

\"spx500\"<\/a><\/p>\n

The\u00a0market reaction to these developments has been one of strong optimism.\u00a0\u00a0<\/strong>Risk assets are surging higher while safe-haven assets such as gold and JPY have fallen.\u00a0The SPX500 hit fresh record highs shortly after the open,<\/strong>\u00a0trading above the prior 2940 level to hit highs of 2976, which are currently broken.<\/p>\n

\"xauusd\"<\/a><\/p>\n

XAUUSD, meanwhile,\u00a0has continued its sharp reversal lower<\/a>\u00a0from the 1433 level to trade 1388 last as safe haven flows dry up.<\/strong>\u00a0However, the key to the follow through on these moves will be whether Trump and Xi are able to keep optimism alive.<\/p>\n

Consequently, the market will now be paying close attention to the first set of trade talks<\/strong>\u00a0following the meeting. Given that the negotiations after the November 2018 G20 meetings failed, the markets are wondering how long this optimism will last. Investors everywhere are hoping that this time around, the superpowers finally reach a deal. And that seems to be supporting prices, at least for now.<\/p>\n<\/div>\n

By <\/strong>Orbex<\/strong><\/a><\/p>\n

 <\/p>\n","protected":false},"excerpt":{"rendered":"

Trump and Xi Take Centre Stage The G20 summit held in Japan last weekend\u00a0was once again upstaged by the\u00a0meeting which took place along the sidelines\u00a0between Trump and Chinese premier Xi Jinping. The fresh outbreak of tariff increases between the two main global economies had sent equities plunging. And the market was hoping that the leaders […]<\/p>\n","protected":false},"author":3,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[],"tags":[],"class_list":["post-150847","post","type-post","status-publish","format-standard","hentry","no-post-thumbnail"],"_links":{"self":[{"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/posts\/150847","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/users\/3"}],"replies":[{"embeddable":true,"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/comments?post=150847"}],"version-history":[{"count":2,"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/posts\/150847\/revisions"}],"predecessor-version":[{"id":150853,"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/posts\/150847\/revisions\/150853"}],"wp:attachment":[{"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/media?parent=150847"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/categories?post=150847"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/tags?post=150847"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}