All About US-China Phase One Deal This Week

China Vice Premier Liu He will be flying to Washington today to commence phase one talks on 15 January. We could see a shift into risk-on sentiments this week.

Glimmer of hope in US-China trade tunnel

The agreement includes protections for intellectual property, food and farm goods, financial services and foreign exchange, and a provision for dispute resolution.

The deal includes improvements on the technology transfer requirements that Beijing imposes on foreign companies, as well as better access to the Chinese market for financial services.

Washington said Beijing has pledged to buy an additional US$200 billion American goods over two years, compared to 2017 purchases.

Under the tariffs part of the deal, Trump cancelled 15% tariffs that had been due to hit US$160 billion worth of Chinese goods on Sunday, especially electronics like cell phones and computers, which would have been particularly painful to US consumers.

While Chinese officials said the US agreed to roll back the other tariffs in stages, for now Washington will keep in place the 25% duties on US$250 billion worth of imports.

Volatility in the market could increase on Wednesday when the actual signing of the phase one deal should take place.

Our Picks

USD/CAD – Slightly bearish.

This pair may fall towards the 1.3000 price level after breaking a strong resistance.

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