Australian dollar spikes on US China trade talks

by Chris Becker

Some strikingly weird moves in the Australian dollar late in the overnight session with a big spike through the 72 handle vs USD  – over 50 pips or half a cent – before a pullback in the early hours this morning before the Sydney open.

What’s that all about? One can usually write off such moves on lower volume end of session trading, but this one was an algo-derived response to a series of news articles speculating that the US is considering a reduction in US tariffs on Chinese imports.

First from the WSJ:

U.S. officials are debating ratcheting back tariffs on Chinese imports as a way to calm markets and give Beijing an incentive to make deeper concessions in a trade battle that has rattled global economies.

The idea of lifting all or some tariffs was proposed by Treasury Secretary Steven Mnuchin in a series of strategy meetings, according to people close to internal deliberations.

Wrong. US Treasury clarified it minutes later on CNBC:

Neither Secretary Mnuchin nor Ambassador Lighthizer have made any recommendations to anyone with respect to tariffs or other parts of the negotiation with China

The real move in currency markets overnight was Pound Sterling:

Pound has soared in recent weeks despite the volatility around Brexit as the prospect of a no-deal Deal is getting stronger by the day. A much higher Pound against Euro will make the Brexit nightmare a double whammy for UK exporters.

Comments

  1. ” the prospect of a no-deal Deal is getting stronger by the day”

    No the prospect of no Brexit is getting stronger by the day.

  2. A constant stream of rumours especially from the WSJ since before Xmas………..things must be bad enough to lie. It seems a bit demeaning to have to trot out the US President every second day to goose the stock market also……….maybe I am showing my age

  3. Trumpy is going to cave. He has already given the game away. It is just a question of how abject his capitulation to his ‘friend’ Xi Jinping will be. Hell, he might even throw South Korea in as a sweetener.

    Snatching defeat from the jaws of victory.

    • Gramus, check out the letter Trump sent to Pelosi regarding her overseas trip.

      Someone in the Trump team has a wicked sense of humour.

      View the ABC or BBC online for the story.