U.S.- China trade issues seem to be lowering, market tensions ease

China asks U.S. to offset trade loss due to Metal Tariffs on Tuesday news markets consider as positive, meaning China and the U.S. are in talks to find a mutually agreeable approach to narrow the trade deficit gap. U.S. Treasury Secretary Steven Mnuchin said he is “cautiously hopeful” that China would reach a deal to avoid tariffs on $50 billion of U.S. exports. Results? DXY Index back to where it started the week; more sideways trading likely into end of month and Good Friday. EUR/USD drop driven by more signs Eurozone data momentum is cooling; USD/JPY propped up by rebound in global equities.

Sentiment for the US Dollar has turned negative into the last week of the month and the quarter. But for now in general, US stocks are continuing to rally, building on their biggest one-day gains since 2015, as soothing noises from the White House ease investors’ fears that a trade war will hurt a robust global economy. Which is good! Trade War is never good.

Indeed, in a week marked by lower participation and thinner volumes in the lead up to Good Friday, Easter, and Passover, the cooling trade tensions between China and the US have proven to be a potent catalyst for risk appetite. US equity markets have swung +/-2% for three days in a row now, the first time that has happened since August 2015; yesterday’s point gains in the Dow Jones Industrial Average were the third-best on record.

Donald Trump’s move last week to impose tariffs on $60bn of Chinese imports rattled fund managers who have enjoyed a benign economic backdrop over the past year. However, sustained hope that China and the US are working to avoid a series of retaliatory measures is helping the S&P 500 rise 0.4 in opening trade on Tuesday, adding to Monday’s 2.7 per cent advance.

The “rally was helped by a much more diplomatic tone out of the White House,” Jim Reid, a strategist at Deutsche Bank, noted of Wall Street’s bounce

Sources: 

https://www.ft.com/content/ba50fcd6-318d-11e8-b5bf-23cb17fd1498

https://www.investing.com/news/economy-news/top-5-things-to-know-in-the-market-on-tuesday-1363685

https://www.dailyfx.com/forex/fundamental/daily_briefing/daily_pieces/top_fx_headlines/2018/03/27/DXY-Rebounds-on-Cooling-Trade-Tensions-Month-End-Rebalancing.html

https://www.fxstreet.com/analysis/eur-usd-analysis-slide-paused-but-may-continue-with-the-us-opening-201803271244?utm_source=NLsession&utm_medium=email&utm_content=hot-story-headline&utm_campaign=america-newsletter