The market has remained relatively stable this week following Trump’s apparent efforts to reduce tensions. Trump has repeatedly mentioned ongoing trade discussions with China, despite Beijing’s denial of any such negotiations. He Yadong, a spokesperson for the Chinese Commerce Ministry, stated that ‘reports regarding progress in discussions are unfounded’ and called on the US to ‘demonstrate sincerity’ if a deal is desired. The DXY index was last recorded at 99.60, according to Frances Cheung and Christopher Wong, FX analysts at OCBC.
Declining bearish pressure observed on the daily chart
“Furthermore, we previously mentioned that Guo Jiakun, a spokesperson for the Ministry of Foreign Affairs, articulated China’s position on the tariff conflict initiated by the US: we prefer not to engage in conflict, but we are not afraid to do so. Should conflict arise, we will persevere; should discussions be offered, we are receptive. He stressed that if the US genuinely seeks to resolve issues through dialogue and negotiation, it should cease its threats and coercion and engage in dialogue with China on the principles of equality, respect, and mutual advantage.”
“This morning, Bloomberg reported that China is reportedly considering tariff exemptions on certain US goods as expenses increase. The possibility of a continued de-escalation narrative should not be dismissed and could support short covering in USD (particularly against safe haven alternatives), subsequent to the >10% decrease (at its lowest point) since the January peak. The widespread USD recovery may also place some pressure on Asian currencies in the short term, despite the accommodating approach towards a trade agreement.”
