TOKYO, Japan – Traders were dispirited in grabbing big positions when the news broke that the China and United States will be signing a preliminary trade deal, fettering the dollar against primary rivals on Thursday.
One-week low before the meeting of the Bank of England is scheduled on Thursday, Sterling traded. Albeit there will be no changes in the existing policies, investors are now concentrated on the qualms brought upon by Britain’s exit from the European Union and what the Bank of England will do about it.
Traders from all over the world are also waiting for the general election results on December 12. The result will decide whether the Conservative Party is allowed to grab a majority of the Parliament or not. It will also give an end to the Brexit on its deadline, the 31st of January.
The phase one signing of the agreement could face delays until the end of the year, a senior official in US President Donald Trump’s administration said in an interview with the Reuters, causing the dollars to drift.
Trump, in the last few months, hinted that this agreement could be approved and signed in November.
However, a lot of investors are not confident with the associated risks on the global outlook. It is with the fact that the Sino-US trade war and Brexit will not be solved anytime soon.
The research chief manager of Gaitame.com Research Institute in Tokyo, Takuya Kanda, said that the dollar is still carving its way for a new direction.
He continued by saying that the US-China trade deal being signed this November is the primary substance for the dollar buying. While they don’t bother to call the delay a disappointment, even if it’s a month, they still need to hear what the government of China can say about the issue.
After its 0.17% decline on Wednesday, the dollar had been steady at 108.94 yean in Asia.
For their trade that would last up to 16 months, China and the United States have already posted a price list of their goods. As a result, it has caused conflicts in the financial markets and also slowed down the growth and investments globally.
Traders are still expectant that the preliminary trade agreement will at least roll back to its price list, but the conflict between Beijing and Washington makes this impossible.
With the approaching deadline of Brexit on January 31 and the snap election on December 12, Governor Mar Carney is now expected to drift clear from where the interest rates are headed to.