Market Ahead – US-China Seeks Deal Before Dec. 15 Tariffs

NEW YORK, N.Y. – The previous week, the stock market has largely focused on updates on the trade deal between the US and China, seeking to reach phase one agreement before the year ends and before the tariff hike towards billions-worth of Chinese imports scheduled on December 15.

The trade talks between two of the largest economies in the world will continue to be one of the hot topics in the coming week as the two sides try to reach an interim deal before the scheduled tariff increase. The ongoing pro-democracy protests in Hong Kong added further misunderstandings between Washington and Beijing, and more are expected this weekend.

The upcoming week will also show the market largely focusing on the UK elections, which will not just dictate the domestic agenda for the next five years, but the outcome of Brexit as well.

With the final week of the campaigns, market players have become overconfident with the Conservatives holding the majority in the polls.

In the market front, the US dollar is expected to remain sensitive to updates on trade talks the coming week, but also leaving a strong focus towards the key rate decisions as well.

With the greenback trading losses against its trading partners the previous week, it is looking to have more declines next week, especially if there will be recorded material drops in the US economy. From the previous statement from the Fed, they said that they are strongly on hold until there are material changes in the economy’s outlook.

The trade talks between the US and China is going strong, according to the previous statement from the US President Trump, although the increasing uncertainty on Hong Kong unrest remains to have a huge impact on trade discussions.

Market players continue to wait on whether the scheduled tariff increase on December 15 will have a meaningful rollback or not. Any tariff update on the scheduled date will largely determine the risk appetite of investors for global indexes.

If all goes well on trade talks, the US dollar will stay as a key safe-haven trade for the following week, and can even outperform the euro as well as other commodity currencies.

On the other hand, oil prices tracked around a 15% increase since early in October, mostly boosted by OPEC efforts to rebalance the market further. Oil price is expected to grind higher, although the ongoing trade war poised as a big risk towards oil prices in the near term.

With the gold previously tracked gains but was derailed by the US job reports on Friday, causing it to flip sharply, the Central Bank meeting scheduled for next week should be key events to determine the sentiments on gold prices.