Aug 18 (Reuters) – The positive market reaction to the delay in the Sino-U.S. Phase 1 trade deal review appears misplaced given the chasm between both countries on a host of issues.
A conference of senior Communist Party leaders and the need to allow time for more Chinese purchases of U.S. exports were cited as reasons for the deferral of the Aug 15 meeting .
Yet both parties would have been well aware of the scheduling conflict and China’s need for more time to ramp up purchases when the meeting date first emerged. The decision to call it off just a day earlier appears curious despite the official line that the postponement did not reflect any substantive problem with the trade deal.
China is far behind on its first-year purchase targets under the trade deal , and there has been a downward spiral in the already fraught bilateral relationship since the meeting was first reported. Both sides may have recognised that it would be very difficult to narrow the differences in a videoconference.
With the U.S. presidential election campaign getting into full swing and China holding a meeting of its top leaders, the facade of a win probably suited both countries.
USD/CNY is likely to hold strong support at 6.9100-6.9200 with the review delay only increasing the likelihood of more 6.9100-6.9700 consolidation.
For more click on FXBUZ
Slow progress: https://tmsnrt.rs/3kJljVi
China soybean crushing markets vs soybean imports: https://tmsnrt.rs/3a2nCxu
(Krishna Kumar is a Reuters market analyst. The views expressed are his own)
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
