Australian dollar gaps lower as US/China trade deal “over”

See the latest Australian dollar analysis here:

Macro Afternoon

Has Peter Navarro went off-reservation? At Reuters:

White House trade adviser Peter Navarro said on Monday the trade deal with China is “over,” and he linked the breakdown in part to Washington’s anger over Beijing’s not sounding the alarm earlier about the coronavirus outbreak.

“It’s over,” Navarro told Fox News in an interview when asked about the trade agreement. He said the “turning point” came when the United States learned about the spreading coronavirus only after a Chinese delegation had left Washington following the signing of the Phase 1 deal on Jan. 15.

“It was at a time when they had already sent hundreds of thousands of people to this country to spread that virus, and it was just minutes after wheels up when that plane took off that we began to hear about this pandemic,” Navarro said.

More at Fox:

  • told “The Story” Monday that President Trump has decided to terminate the China trade deal as intelligence officials grow increasingly confident that the coronavirus pandemic originated in a Wuhan laboratory.
  • “It’s over,” Navarro told host Martha MacCallum.” Here’s the turning point,” he explained. “They came here on January 15th to sign that trade deal, and that was a full two months after they knew the virus was out and about.

The Australian dollar just gapped:

Stocks too:

Is this the Trump gambit to turn his failing election campaign:?

Updated:

Now Navarro has walked back his statement, and clarified that the Phase 1 trade deal “continues in place”:

“My comments have been taken wildly out of context. They had nothing at all to do with the Phase I trade deal, which continues in place. I was simply speaking to the lack of trust we now have of the Chinese Communist Party after they lied about the origins of the China virus and foisted a pandemic upon the world.”

David Llewellyn-Smith
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Comments

  1. Powell will be dusting off a statement on yield curve control and everything will be fixed overnight.

  2. Goldstandard1MEMBER

    Serious question though – how long can economies keep getting bad news and the Fed paints over the cracks? At some point the structure has to fall.

    • Ronin8317MEMBER

      The Fed can buy up the entire US stock market if they choose to, and it looks like they’ll do that.

      • happy valleyMEMBER

        Absolutely. And remember Kamikaze Kuroda of the Bank of Japan has bought up 40% (?) of the Japanese stock market, so Powell’s pride is very much at stake here?

      • And once it owns everything ….. what then? They can but the consequences are unknowable.

    • I suspect until company earnings and forecasts are delivered in Q2 and Q3 forecast. At the moment everyone has just pulled their forecasts and there isn’t any real data to go off other than an obvious bounce off the crash in April.

  3. SnappedUpSavvyMEMBER

    oh dear oil getting spanked what a bummer

    could this be very good for aussie rare earths? 🙂

          • VML and IXR are two other possibilities. Disc: I own both, holdovers from when they were gold explorers. I recently topped up a bit on VML as I think their project in Canada looks good. But I’ll be happy if I get my money back on IXR (they have what could be a good deposit, but it’s in Africa)

  4. Ronin8317MEMBER

    China cannot comply with the term of the trade deal anyway. I would have though accusing China for breaking the deal would score more political points. Trump must be really desperate to find a scapegoat for his COVID-19 mismanagement.

    On a more objective basis, the US banned Chinese visitors on January 31st, and the number of COVID-19 cases didn’t explode until March, which corresponds to Iran and Italy COVID-19 exploding out of control. CCP lies regardless, people in Wuhan are being locked inside their apartment by having their front door sealed. If that doesn’t make you take the risk seriously, I doubt the CCP lying less would make a difference.

    • there was a caveat in the deal that in an event of pandemic China is not required to buy all that volume. Technically US breaks the deal. Not fan of China but they were smart enough to include the pandemic in the deal while US was not that smart to agree to it.

      • Smart as in lying about the virus while signing a deal with caveats about the very problem they are concealing.

        • everyone lies. thing is also everyone with minute traces of brain knew about the virus when the deal was being negotiated.

  5. sydboy007MEMBER

    I get your anti Trump, but you have to say the democrats would handle things better with open borders and free money to everyone who makes it into the country.

    40% of gun sales recently are to first time gun owners. The media is making it look like the country is descending into chaos.

    There’s too much risk to show Trump support. You can get fired for association to wrong think. A magic the gathering artist was sacked for following the wrong people on Twitter.

    How much longer can Biden hide?

    • While Trump is making a dog’s breakfast of everything he touches at present, in full view of the country, Biden does not need to spend a dime or saying anything to distract voters from their current President. And when he comes out he can ask 2 questions. Are you better off than you were 4 years ago … old but still good … and Can you afford 4 more years of this President?

  6. The fed broke it. Now, they own it.MEMBER

    Gap? Blink and you will miss it. Has just done a 360° round trip. AUD volatility is insane.

  7. +1 billion.
    I think there will be some violence from ‘antifa’ that handily comes along to distract the rubes.