Trade in focus as US-China meet for key talks

3:28 PM October 9, 2019

If last week’s market moves were mainly driven by economic releases, the theme this week has been far more focused on politics with the latest developments on trade at the forefront of traders’ minds. 



  • US-China set for key trade talks

  • China open to “partial deal”

  • Soybeans gain as additional purchases announced 


Thursday will see the start of the first minister-level meetings in more than two months between the US and China as the world’s two largest economies come to the negotiating table to try and hammer out a deal on trade. Chinese Vice Premier Liu He is scheduled to meet with US trade representative Robert Lighthizer and Treasury Secretary Steven Mnuchin and the outcome of these could not only move markets into the weekend but also for several weeks going forward. 

The latest developments on this front could be characterised as constructive with separate reports that Beijing is open to a partial trade deal despite the recent tech blacklist and that China has offered to buy an extra $10B of US Soybeans causing spikes higher in Soybeans and also the US500. Source: xStation 

US food exports to China and Soybeans in particular have dropped significantly as trade tensions ramped up with the imposition of tariffs. With China announcing their intention to increase purchases going forward will we see a rally in Soybeans? Source: xStation

Other markets to watch:

It’s not just China that is feeling the force of the Trump administration’s aggressive trade policy with the US Treasury releasing a list of products it plans to target with duties that would take effect October 18th. Source: Bloomberg  


As far as the markets are concerned, a de-escalation of trade tensions is seen as a clear positive and would likely cause broad risk-on moves. Under such a scenario stocks would gain alongside US yields (Bond prices fall) and antipodean currencies (AUD and NZD) while Gold and perceived safe haven currencies such as the JPY and CHF would decline. On the other hand a failure to make a breakthrough would likely lead to risk-off trade and the opposite moves as those described above. 

It’s not just US indices that are sensitive to trade developments with the DE30 also showing a heightened sensitivity of late. A recent foray higher failed to break above the resistance zone from 12160-12220 and a possible bear flag is forming. 11815 remains potential support. Source: xStation    



The content of this report has been created by X-Trade Brokers Dom Maklerski S.A., with its registered office in Warsaw, at Ogrodowa 58, 00-876 Warsaw, Poland, (KRS number 0000217580) and supervised by Polish Supervision Authority ( No. DDM-M-4021-57-1/2005). This material is a marketing communication within the meaning of Art. 24 (3) of Directive 2014/65/EU of the European Parliament and of the Council of 15 May 2014 on markets in financial instruments and amending Directive 2002/92/EC and Directive 2011/61/EU (MiFID II). Marketing communication is not an investment recommendation or information recommending or suggesting an investment strategy within the meaning of Regulation (EU) No 596/2014 of the European Parliament and of the Council of 16 April 2014 on market abuse (market abuse regulation) and repealing Directive 2003/6/EC of the European Parliament and of the Council and Commission Directives 2003/124/EC, 2003/125/EC and 2004/72/EC and Commission Delegated Regulation (EU) 2016/958 of 9 March 2016 supplementing Regulation (EU) No 596/2014 of the European Parliament and of the Council with regard to regulatory technical standards for the technical arrangements for objective presentation of investment recommendations or other information recommending or suggesting an investment strategy and for disclosure of particular interests or indications of conflicts of interest or any other advice, including in the area of investment advisory, within the meaning of the Trading in Financial Instruments Act of 29 July 2005 (i.e. Journal of Laws 2019, item 875, as amended). The marketing communication is prepared with the highest diligence, objectivity, presents the facts known to the author on the date of preparation and is devoid of any evaluation elements. The marketing communication is prepared without considering the client’s needs, his individual financial situation and does not present any investment strategy in any way. The marketing communication does not constitute an offer of sale, offering, subscription, invitation to purchase, advertisement or promotion of any financial instruments. X-Trade Brokers Dom Maklerski S.A. is not liable for any client’s actions or omissions, in particular for the acquisition or disposal of financial instruments, undertaken on the basis of the information contained in this marketing communication. In the event that the marketing communication contains any information about any results regarding the financial instruments indicated therein, these do not constitute any guarantee or forecast regarding the future results.