President Trump’s branded a ‘quick’ deal as ‘probably unlikely’ in the latest round of meetings between the world’s two largest economies. Negotiations have hit snags on the issues of demonstrations in Hong Kong and alleged abuse of Muslim ethnic minority groups which has led Washington to blacklist 28 Chinese companies.
The whole world will be hoping for a resolution to the petty conflict, as countries like Germany teeter on the edge of recession as a result of the global slowdown. The US economy itself beginning to suffer, showed by last week’s poor PMI figures. XAUUSD has risen $10 on the day back up to $1500 as the trade war looks set to continue.
Trump’s decision to pull troops out of Northern Syria is also unlikely to bolster stability and it is not hard to imagine another major flare up in the region. Whilst it is fair to say that the US is getting tired of being the global policeman, the problem is, that the alternatives of Russia and China are not exactly palatable. Of course, the US has used it’s global muscle to benefit its own economic expansion/interests but if the States is now minded to leave the stage the military influence of the infinitely more corrupt old socialist powerhouses might have far graver long term implications to the West.
The outlook for oil looks bleak on the back of the ongoing dispute, with a slowdown in global demand driving down the price of the fuel. XBRUSD and XTIUSD both continue to hover just a couple of dollars off, of yearly lows, trading around $58 and $53 respectively. With the depression looking set to continue, prices may continue to drop despite OPEC’s attempts to curb the fall. Could the cartel increase measures in an attempt to pick prices back up?
Bad news for Boris
German Chancellor Merkel told Boris Johnson that there could only be a deal if Northern Ireland were to remain in the customs union, if not, then a deal would be ‘overwhelmingly unlikely’. GBPUSD did not appreciate the tone, dropping to below 1.2225 before recovering slightly to around 1.2250. The stance of the EU appears strange as they risk the UK just deciding that Northern Ireland should not be the tail that wags the dog.
The next move for the PM looks increasingly like requesting an extension for further negotiations, or an election which would essentially act as a second referendum. Uncertainty would continue to hamper the UK’s economic progress as businesses look unlikely to boost investment on the back of negative business sentiment.
Asian shares remained cautious ahead of crunch US—China trade talks, with advances capped by President Trump’s pessimistic sentiment. Stocks elsewhere are struggling early on, UK100 and EUSTX50 losing 0.08% and 0.46% and US30 down 0.36% at the time of writing.
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