Trade representatives from the two countries had a phone call yesterday to review a phase I trade agreement. China said they had “constructive dialogue”, while the US said they “see progress”. The news boosted market risk sentiment. The session has been devoid of major data and events as investors await the Jackson Hole central bank meeting later this week. Spot Gold, currently hovering around $1,930, has seen its recent rally take a beating, notably as inflows into the SPDR Gold Shares ETF dried up over the past four trading days.
Just! There’s a big piece of news coming out of China-Us trade
On Tuesday morning in Asia, a major piece of news came out about the trade situation between China and the United States: Trade representatives from both sides spoke yesterday.
Liu spoke with U.S. Trade Representative Robert Lighthizer and Treasury Secretary Steven Mnuchin, China’s Commerce Ministry said On Tuesday.
The following is the full text of the MoFCOM statement:
On the morning of August 25, Liu He, member of the Political Bureau of the COMMUNIST Party of China (CPC) Central Committee, Vice Premier of the State Council and Chinese leader of the China-Us Comprehensive Economic Dialogue, spoke by telephone with US Trade Representative Robert Lighthizer and Treasury Secretary Steven Mnuchin. The two sides held constructive dialogue on strengthening macroeconomic policy coordination and implementing the first phase of the economic and trade agreement between the two countries. The two sides agreed to create conditions and atmosphere to continue to push forward the implementation of the first phase of the China-Us economic and trade agreement.
That followed confirmation from Reuters that U.S. Trade Representative Robert Lighthizer and Treasury Secretary Steven Mnuchin held talks with Chinese Vice Premier Liu He on Monday.
The full text of the USTR statement is as follows:
Ambassador Lighthizer and Mnuchin held a regular conference call tonight with Chinese Vice Premier Liu He to discuss the implementation of the historic FIRST phase agreement between the United States and China.
The two sides discussed the structural reform of calling for China to achieve agreement and the steps, these reforms will ensure greater protection of intellectual property rights, eliminate the American company in the field of financial services and agriculture faces obstacles, and eliminate forced technology transfer.
The two sides also discussed the sharp increase of American products procurement, and actions required for the future performance of this agreement.
Both sides see progress and are committed to taking the necessary steps to ensure the success of the agreement.
According to a statement from the two sides, China said “constructive dialogue” had taken place, while the US said “both sides see progress” and that the TWO countries are now optimistic about a phase I trade agreement.
As a result, risk sentiment continued to rebound, Asian shares continued to rebound and U.S. stock futures extended yesterday’s rally from record highs.
The S&P 500 and Nasdaq both set record closing highs yesterday as optimism about possible medical advances in the fight against the epidemic drove all three indices higher.
New developments in the global pandemic race have boosted the global market, including FDA approval of novel Coronavirus plasma from novel Coronavirus patients who have recovered from novel coronavirus.
The US government is considering speeding up approval of trials of coVID-19 vaccines developed by AstraZeneca and Oxford University with a view to using them in the US before the November 3 election.
For now, market participants will be paying close attention to Fed Chairman Colin Powell’s speech on monetary policy at this week’s Jackson Hole symposium, which could shed light on the central bank’s next steps to boost the recovery. The workshop will be held online this year.
The dollar edged higher yesterday, recovering strongly from its lows to close above the 93 mark, while the dollar index continued to hover above the 93 mark during Tuesday’s session.
Powell’s speech on Thursday could be the next major dollar driver, with investors watching for hints that the Fed will move its inflation target to an average level. That would allow inflation to rise to a higher level than before the Fed raises rates, making up for decades of modest price increases.
“I think we could see some foreign currency retreat and a stronger dollar if Powell didn’t make it very clear that we’re going to have an average inflation target,” said Erik Nelson, macro strategist at Wells Fargo.
As the dollar continued to rally in support, spot gold closed down slightly yesterday, losing the 1930 mark, and continued to hover above the $1930 mark in Asian trading on Tuesday, awaiting further guidance.
Notably, inflows into the SPDR Gold Shares ETF have dried up over the past four trading days.
Anz said rising risk appetite had dented investor demand for gold. The dollar also strengthened, while further gains in US bond yields also hit gold.
The bank noted that renewed optimism had held back inflows into gold etfs. The largest fund, SPDR Gold Shares, has seen no inflows in the past four trading days. Investors also awaited comments from Federal Reserve Chairman Colin Powell.
“Gold is just consolidating with major stock indexes at record highs,” said Phillip Streible, chief market strategist at Blue Line Futures. It takes a bigger catalyst, additional fiscal stimulus and higher inflation to really push gold higher.”