Australian Dollar strengthens following China/US Truce (Daniel Johnson)

Trump holds back on Tariffs

Following the G20 in Buenos Aries the United States and China have called a truce on their trade war. On Saturday Trump agreed to hold back on new tariffs and President XI Jinping has pledged to increase Chinese purchases on US goods. Be wary of thinking this trade war is over however, further negotiations are ahead and they are set to be time consuming and problematic. Both leaders still seem to be holding their stance on the key problems of trade.

Trump has agreed to postpone a plan to raise tariffs on USD 200bln worth of goods to 25% from 10% in January. The Chinese have agreed to increase their purchases of industrial, agricultural and energy products which China had hot with retaliatory tariffs after Trump had implemented a wide range of tariffs.

There are now set to be 90 days of talks and Trump has threatened that if the trade differences are not resolved he will proceed with his 25% tariff.

Brexit Farce continues

The Truce has caused a spike in Australian Dollar value making further gains against Sterling which is also being weighed down by the complete farce which is Brexit. May’s Brexit deal is due to be voted on by parliament on 11th December and it is being widely criticised. If the vote does not go through Labour will challenge May’s position which would no doubt hit the Pound further. There is also the possibility that if the deal is not voted through amendments will be made before a second vote within 14 days of the first. I hope this is the more likely outcome as the alternative would mean chaos and no doubt sterling will take a severe hit.

I am afraid short term Sterling has little chance of making any significant gains against the majority of major currencies. If you have to move short to medium term I would consider performing a tranche at current levels.

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