Search ForexCrunch

Greg Gibbs, Analyst at Amplifying Global FX Capital, suggests that they are rating the probability that Trump allows some increased hope for a trade deal also relatively high of around 50%, again with a wide confidence interval.

Key Quotes

“Within this scenario is the degree of hope he allows.   It may be vague, or it may be somewhat optimistic.”

“Trump has claimed that he has great personal respect and rapport with Xi.   Both Xi and Trump would like to come from the meeting appearing to be great leaders that can get things done for their countries.   The fact that the two leaders are meeting places pressure on them to make some progress.”

“We might expect, for instance, that they announce plans to restart high-level talks between the two sides.   Trump may announce a hold on further tariffs that are planned to be implemented early next year if there is no progress on a trade agreement.”

“Hope may spring eternal if the leaders announce new trade talks.   Global equity markets are down significantly this year, and a modest increase in the possibility of a trade deal may provide a lift to global market confidence.   We are witnessing that in trading on Thursday.”

“The fact that equity markets in the US and China have fallen significantly may have spooked advisors in both countries that a no deal outcome could threaten their economies, something they should avoid.”

“Trump has seen the weakness in Chinese equity markets as a sign that his policy is working.   However, falls in the US equity market in the last month may increase his willingness to consider making a trade deal with China.   Or at least provide hope that deal will be made.”