TALKING POINTS – AUD/USD, HUAWEI, US-CHINA TRADE WAR
- The Australian Dollar may fall this week amid trade war talks
- Huawei scandal and arrest of CFO complicating negotiations
- Will China and the US be able to resolve trade dispute in time?
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The Australian Dollar might tumble this week amid fears that trade talks between Vice Premier Liu He and Treasury Secretary Steven Mnuchin may fall out. This comes after Australia’s NAB Business Confidence Survey fell short of expectations and sent the Aussie lower.
Against this backdrop is the scandal involving Chinese tech giant Huawei and the arrest of its CFO Meng Wanzhou. The US Department of Justice today filed an indictment against the firm on accounts of fraud and breaking US laws and is formally requesting extradition of Meng from Canada.
The Chinese government responded by asking the US to withdraw the arrest order and claiming that the charges are unfair and unethical. This puts an already strained US-China relationship under greater duress right before the delegation from Beijing arrives in Washington on January 30.
The US and China agreed to 90-day ceasefire in December that ends on March 1. If a deal between the two parties cannot be negotiated, the Trump Administration has threatened to impose tariffs up to 25 percent on $200 billion worth of Chinese goods. Such an outcome would almost certainly impact the Australian Dollar. Slower Chinese growth this year from the trade wars in 2018 has also weighed down on the currency.
AUD/USD – Daily Chart
![Chart of AUD/USD](https://a.c-dn.net/b/4pbY3g/AUDUSD-May-Fall-Amid-Huawei-Scandal--Markets-Eyeing-Trade-Talks_body_Picture_4.png)
AUD/USD TRADING RESOURCES
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--- Written by Dimitri Zabelin, Jr Currency Analyst for DailyFX.com
To contact Dimitri, use the comments section below or @ZabelinDimitri on Twitter