The World Trade Organization has launched an inquiry into whether Donald Trump’s duties on $250 billion’s worth of Chinese goods bridged the WTO’s requirement for equal tariff treatment among its members.
The news does not bode well for the second round of trade talks starting this week between the world’s two superpowers. Tensions have already been up as the US Department of Justice yesterday, 28 January charged Chinese telecoms giant Huawei and its Chief Financial Officer Meng Wanzhou with bank fraud, violation of sanctions against Iran and theft of technology. Investors now fear there is less chance for a positive outcome from the crucial talks.
Meanwhile, Theresa May faced an open revolt after making a plea to backbench MPs to support her plan to renegotiate the Northern Irish backstop. Tory Brexiteers refused to do so on the grounds that it would not be legally binding.
With just 59 days until Britain is due to leave the European Union, Parliament is far from reaching consensus on any form of Brexit. I expect further uncertainty is likely to cause volatility in Sterling overnight as MPs are due to vote on key amendments to the withdrawal agreement.
With no major data releases ahead of the Federal Reserve’s (Fed) interest rate decision and press conference tomorrow, 30 January, the Brexit vote and US-Chinese trade talks will dominate the markets and headlines.
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