Never miss a story from Martin Essex

Subscribe to receive daily updates on publications
Please enter valid First Name
Please fill out this field.
Please enter valid Last Name
Please fill out this field.
Please enter valid email
Please fill out this field.
Please select a country

I’d like to receive information from DailyFX and IG about trading opportunities and their products and services via email.

Please fill out this field.

Your Forecast Is Headed to Your Inbox

But don't just read our analysis - put it to the rest. Your forecast comes with a free demo account from our provider, IG, so you can try out trading with zero risk.

Your demo is preloaded with £10,000 virtual funds, which you can use to trade over 10,000 live global markets.

We'll email you login details shortly.

Learn More about Your Demo

You are subscribed to Martin Essex

You can manage your subscriptions by following the link in the footer of each email you will receive

An error occurred submitting your form.
Please try again later.

US-China trade talks, news and analysis:

  • Hopes are fading that the US and China will agree this week to end their trade war.
  • That is lifting haven assets, which will likely strengthen further if the talks break down.

Trade talk fears damaging market sentiment

Concern is growing in the markets that trade talks this week between the US and China could break down, leading to a flight to haven assets like gold, the Japanese Yen and the notes and bonds issued by the US Treasury. If that is confirmed, more money is likely to flow into them, boosting their prices further.

US President Donald Trump threatened Sunday to levy tariffs on an additional $325 billion of Chinese goods, in addition to the $250 billion of its products already hit by import taxes. He bumped up the rhetoric further Wednesday, saying China “broke the deal” and the Chinese responded by saying they “will not succumb to any pressure”.

That could just be rhetoric ahead of talks Thursday and Friday between the US and Chinese Vice Premier Liu He in Washington but a breakthrough still seems unlikely.

US-China trade war: intellectual property at heart of dispute

Gold and Japanese Yen benefit

So far, the principal beneficiaries of the flight to safety have been gold, the Japanese Yen and the government notes and bonds issued by the US and Germany. While risk appetite could increase if a deal is done, it now seems more likely that the talks will stall, decreasing the attraction of riskier assets like stocks.

Japanese Yen winning the safe haven battle vs USD and gold

Gold Price Chart, Daily Timeframe (November 14, 2018 – May 9, 2019)

Latest gold price chart.

Chart by IG (You can click on it for a larger image)

As the chart above shows, the gold price looks currently to be pausing for breath before potentially extending this year’s gains. However, the Japanese Yen is still advancing strongly against the risk-on Australian Dollar, which is seen in the markets as a proxy for China, and AUDJPY could yet lose more ground.

AUDJPY Price Chart, Daily Timeframe (January 10 – May 9, 2019)

Latest AUDJPY price chart.

Chart by IG (You can click on it for a larger image)

As for US Treasuries, the yield curve looks close to inverting again, seen by some as a sign of economic weakness ahead. With the trade war raising growth concerns, the three-month yield, at 2.428%, is now only just below the 10-year yield of 2.449%.

US Yield Curve (May 9, 2019)

Latest US yield curve chart.

Source: Investing.com

More to read:

A brief history of trade wars

Why a US yield curve inversion matters

How to trade gold: top trading strategies and tips

Resources to help you trade the forex markets:

Whether you are a new or an experienced trader, at DailyFX we have many resources to help you:

--- Written by Martin Essex, Analyst and Editor

Feel free to contact me via the comments section below, via email at martin.essex@ig.com or on Twitter @MartinSEssex