Market Brief: China wants US tariffs removed before further farm goods purchases
Fawad Razaqzada October 15, 2019 7:05 AM
- At midday in London, GBP was the strongest and AUD among the weakest. Gold was trading higher, copper and oil lower. Stocks were coming off their best levels after futures rose earlier in the day.
- GBP was holding steady following recent sharp gains, undermining the FTSE. The EU's chief negotiator Michel Barnier, who had previously said "big gaps" remained between the UK and EU, has now said a Brexit deal could be struck as early as this week. However, he has warned it was "time to turn good intentions into legal text". The UK and EU officials are set to meet at a summit on Thursday and Friday. This meeting could determine whether UK is headed for a no-deal Brexit at the end of this month.
- European stocks were sharply higher earlier but gave up some of those gains after Bloomberg reported, citing people familiar with the matter, that China will struggle to buy $50 billion of US farm goods annually unless Washington removes retaliatory tariffs so they can afford it. The focus will turn to US Q3 earnings reporting session, which kickstarts this week. Lots of bank earnings will come in over the next few days, including Citigroup, JP Morgan, Goldman Sachs and Wells Fargo today and Bank of American tomorrow. HERE is my colleague Ken Odeluga’s bank earnings preview.
- Data highlights
- The German ZEW Survey revealed the “Current Situation” index deteriorated more than expected (to -25.3 vs. -19.9 in September and -23.6 expected), while the “Expectations” index deteriorated less than expected (-22.8 vs -22.5 last and -26.4 expected).
- Supported by raised Brexit optimism, the GBP barely reacted to news UK wages grew less than forecast at 3.8% 3m/y vs. 4.0% eyed or the fact the unemployment rate ticked higher to 3.9% y/y from 3.8% last. Sterling did ease off the highs but was still retaining most of its gains.
- Overnight, Chinese CPI inflation came in at +3.0% y/y, above 2.9% expected and 2.8% last. However, PPI measure of inflation declined 1.2% y/y as expected (vs. -0.8% prior). In other news, US President Donald Trump imposed steel tariffs on Turkey Monday night and threatened there could be more to come. This comes after Turkey’s military movement into Syria. The USD/TRY exchange rate was relatively stable at around 5.900
Disclaimer: The information on this web site is not targeted at the general public of any particular country. It is not intended for distribution to residents in any country where such distribution or use would contravene any local law or regulatory requirement. The information and opinions in this report are for general information use only and are not intended as an offer or solicitation with respect to the purchase or sale of any currency or CFD contract. All opinions and information contained in this report are subject to change without notice. This report has been prepared without regard to the specific investment objectives, financial situation and needs of any particular recipient. Any references to historical price movements or levels is informational based on our analysis and we do not represent or warranty that any such movements or levels are likely to reoccur in the future. While the information contained herein was obtained from sources believed to be reliable, author does not guarantee its accuracy or completeness, nor does author assume any liability for any direct, indirect or consequential loss that may result from the reliance by any person upon any such information or opinions.
Futures, Options on Futures, Foreign Exchange and other leveraged products involves significant risk of loss and is not suitable for all investors. Losses can exceed your deposits. Increasing leverage increases risk. Spot Gold and Silver contracts are not subject to regulation under the U.S. Commodity Exchange Act. Contracts for Difference (CFDs) are not available for US residents. Before deciding to trade forex and commodity futures, you should carefully consider your financial objectives, level of experience and risk appetite. Any opinions, news, research, analyses, prices or other information contained herein is intended as general information about the subject matter covered and is provided with the understanding that we do not provide any investment, legal, or tax advice. You should consult with appropriate counsel or other advisors on all investment, legal, or tax matters. References to Forex.com or GAIN Capital refer to GAIN Capital Holdings Inc. and its subsidiaries. Please read Characteristics and Risks of Standardized Options.