Early Tuesday morning in Asia, the South China Morning Post (SCMP) came out with the news that conveys a lack of optimism surrounding the trade relations between the United States (US) and China.
Key quotes
US-China trade war phase one deal largely welcomed, but businesses and former trade officials wary of getting carried away.
Geopolitical issues provide ample potential for the deal to get interrupted, while text needs to be translated, legally scrubbed and proofread, state media said.
In the world of trade agreements, however, the US-China phase one deal is a short one. The Trans-Pacific Partnership final text ran to over 5,000 pages. This deal, on the other hand, is a mere 86-pager. The deal that Beijing torpedoed in May, meanwhile, was close to 150 pages.
Generally, trade advocates would prefer a more substantive deal, but there is also an acknowledgment that reopening the negotiations could provide plenty of room for disagreement.
FX implications
While AUD/USD drops to the sub-0.6880 area after the news, USD/JPY shows no negative signs due to the release. The mediate release indicates pressure building upon the details of the US-China trade relations despite recently agreed phase-one. The same could weigh on the commodity-linked currencies and market sentiment.
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