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Markets await Trump-Xi G20 meeting

While sentiment around a potential US-Chinese trade agreement has improved, the chances of that happening at the G20 summit are low.

Centtrip: US, China agree talks date for October

The Dollar held steady this morning ahead of the G20 summit in Japan this weekend. Market participants will be watching the crucial meeting between US President Donald Trump and his Chinese counterpart Xi Jinping for any sign of progress or even an end to the trade war.

The talks between the world’s two largest economies so far have been fraught, and traders and analysts caution that a resolution at the G20 summit is far from certain.

However, sentiment has improved somewhat following South China Morning Post reporting that Washington and Beijing were laying out an agreement that would help avert more tariffs on another $300 billion’s worth of Chinese imports, leaving markets hopeful of progress. That was reflected in an easing of risk aversion as US stocks gained and Treasury yields shifted lower. But a cautious mood prevails.

The drawn-out trade war has slowed global growth and pushed many central banks towards cutting interest rates to support their economies. Any sign that the trade war could come to an end would be a significant boost for the global economic outlook.

A safe haven in times of uncertainty, gold has had its strongest monthly rally in three years, having risen by a further 0.7 per cent to $1,419 per ounce. The Dollar Index, which measures the US currency against six of its peers, is at 96.195, down 0.3 per cent on the week.

The Euro’s trading remained unchanged, at $1.1370. However, analysts suggest that sentiment around the single currency remains weak amid speculation that the European Central Bank (ECB) may ease its monetary policy.

The Eurozone is due to release inflation data for June. Any sign of weakness would support the argument for monetary easing. Core inflation decelerated sharply in May to 0.8 per cent.

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