G20 Summit Eyed for Trump-Xi Talks
FX traders are anxiously awaiting the start of the US-Sino discussion on trade which is expected to take place during the G20 summit in Argentina. Markets are waiting to see if anything that Presidents Trump or Xi might say will be the catalyst for currencies, with a view to safe haven currencies like the Dollar and Yen, as well as higher risk currencies, such as the Aussie and Kiwi Dollars which are primarily tied to China's economy. The greenback has been experiencing some pressure after the Federal Reserve Bank Chairman confirmed the likelihood that the pace of interest rate hikes in the US is likely to slow.
China's Economy at Stake
On Thursday, President Trump, in talking about the Summit, sent mixed messages to markets about the prospects of working out a trade deal with the Chinese government. The US President has threatened to increase the tariffs on Chinese goods from the current 10% if some beneficial deal is not brokered. Already, the trade rift is having a negative impact on China's economy with the latest manufacturing figures showing an unexpected drop. According to the China Federation of Logistics and Purchasing, November's Manufacturing PMI reading came in at 50.0, slightly below the 50.2 that analysts had predicted. For reference, 50.0 is the threshold which separates an expanding economy from a contracting one.