- SCMP reports December tariff hike may be postponed if a trade deal is not signed by then.
- China may respond fiercely if President Trump signs Hong Kong's bill.
- EUR/USD failed to break above the crucial 1.1100 level.
- U.S dollar index remains volatile below 98.00.
Whether a trade deal will be signed between the United States of America and China remains a matter of massive uncertainty with conflicting statements from both sides. On one hand, President Trump stated earlier this week that he intends to impose punitive tariffs on Chinese goods if China refuses to sign the phase 1 deal. On the contrary, South China Morning Post (SCMP) reported earlier this morning that the U.S President is likely to postpone the tariff hike set for December 15th if the countries fail to strike a deal by then.
U.S Hong Kong Bill Expected To Barricade The Trade Deal
In the past few weeks, the prospect of a phase 1 deal between the U.S and China was optimistic. In light of the recent statements from the White House, however, as well as the unanimous approval of a bill that supports protests in Hong Kong, the uncertainty has caught steam once again. According to economists, the Hong Kong bill is likely to pose a new threat to a trade deal between the two superpowers of the world. China has already blamed the Trump administration for meddling in its internal affairs. Jinping’s government is now closely monitoring Trump’s next move that is likely to determine the direction of the trade talks moving forward.
Further complications revolving a trade deal between the U.S and China include the latter insisting on greater reductions in the already imposed tariffs. The recent developments, as per the experts, are hinting at the possibility that the phase 1 deal may not be signed in 2019 and the matter will continue to impact the financial markets into the year 2020.
EUR/USD Failed To Break Above The Crucial 1.1100 Level
Following the SCMP announcement that the December 15th tariff hike may see a delay, EUR/USD was reported surging higher and challenged the crucial 1.1100 level that marked strong resistance for the bulls. The pair, however, ran out of steam just below the resistance. Failing to break above the barrier, the pair retreated from 1.1096 and is currently trading at around 1.1065.
The financial experts have further added that the U.S dollar index is likely to remain volatile below 98.00. Currently at 97.85, the next targets for the index on the downside are 97.68, 97.56, and 97.11 that marks the monthly low of November 1st. On the upside, breaking above 98.45 (monthly high of November 13th) is required for the bullish sentiment to return. All in all, events circling the U.S – China trade negotiations are certain to determine the direction for the U.S dollar in the weeks to come.