Reports from China in the early hours of Tuesday noting that the Chinese finance ministry announced a new list of U.S. imports that are eligible for tariff waivers. It marks the second batch of trade war tariff exemptions covering; 79 products, including ores, chemicals and certain medical products.
It comes after rising tensions between the two, following Trump’s tariff threats almost two weeks ago. Chinese trade officials were reported on Monday to have been frustrated with the malicious approach from Trump and his government. There were some calls from the officials for a reworked deal.
The above-noted reports prompted some safe-haven flow into the USD, which saw the DXY jumping to its highest levels in over two weeks. The U.S. dollar has been extremely sensitive to any developments between the largest two nations in the world. It appears to be very much dictating direction, but markets are struggling to find a definitive tone, given the mixed signals from various updates.
What does this mean for the market?
The latest reports are prompting some risk appetite, with the USD on the back foot as the time of writing. Riskier FX currencies such as; AUD, NZD, CAD, GBP are all gaining ground, taking advantage of this current improved market tone. Safe-haven JPY is on the back foot given the sentiment noted.
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