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Bloomberg
Even though it wasn’t the trade deal some analysts hoped for, China dodged more tariffs, and that may be enough to spur a market rally.
The onshore yuan may rise and the Australian dollar will be boosted by a potential advance in crude oil and industrial metals, according to Vijay Valecha, chief investment officer at Century Financial Consultancy in Dubai. He also sees the euro strengthening against the US dollar in the near term, buoyed by prime minister Boris Johnson’s decisive win in UK election.
Washington and Beijing agreed to a first phase of a broader trade deal that will see China boost imports, including of American agricultural products, and the US halving duties on $120 billion of Chinese goods. The US has also delayed levies that were due to be imposed on Sunday, and China said it will suspend additional tariffs on certain American imports.
While the trade deal fell short of some analysts’ expectations for a bigger decrease in tariffs, the delay in Sunday’s levies on Chinese goods is a comfort, said Charles-Henry Monchau, a managing director at Al Mal Capital in Dubai.
“The mood should be positive†in the short term, he said, adding that a risk rally might last a few days. He’s expecting the US dollar to weaken and emerging-market currencies to advance.