US and Chinese Officials Engage in Positive Communication to Ease Tensions

During the Asian trading hours and as seen in the early part of the European session, a decent push higher has been observed in the riskier assets.

It was reported that U.S. and Chinese trade officials spoke over the phone late on Thursday, discussing their Phase 1 trade deal, which had been signed in January.

The call was between U.S. Treasury Secretary Steven Mnuchin and U.S. Trade Representative Robert Lighthizer and Chinese Vice Premier Liu He, where both sides “agreed that in spite of the current global health emergency, both countries fully expect to meet their obligations under the agreement in a timely manner” according to statements from the USTR and China’s Ministry of Commerce.

It comes following the rising tensions that were sparked at the back end of last week, pushing into this week, where Trump threatened to take action on China with new tariffs. The U.S. President wanted an inquiry into China’s role in the origin and spread of the Coronavirus. Latest reports did show there was no scientific evidence of Coronavirus being created in a lab in China.

What does this mean for the market?

The beneficiaries overnight were AUD, NZD, given their respective economic ties with China, USD is seen generally weaker across the board. Stock indices were also trading in the green, in Asia, which has carried through to the European bourses and U.S. stock futures trading in positive territory.

Gold prices remain elevated given markets have been pricing in negative interest rates from the U.S early next year. The push higher for Gold (XAU/USD) also being used as a hedge, against potential incoming risk from the NFP report and U.S. China tensions still with the possibility of flaring.



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