Macro Digest: China fix USDCNY higher and totally ignore overtures by President Trump

Macro 5 minutes to read

Steen Jakobsen

Chief Investment Officer

Summary:  The Chinese is ignoring all of overtures made by Donald Trump & fixed USDCNH at all time high this morning.


See article below the video

What: The Chinese is ignoring all of overtures made by Donald Trump and fixed USDCNH at all time high this morning and with 240 pips (See table below) -  Again a big and important point considering that USDCNY/CNH is best gauge of real status of trade talks

Action: Sell rallies in equities - two strategies possible:  1. Medium-term: Sell on @market 7575.00 with stop/loss of 1 ATR :  175 points  2. Short-term sell market with stop/loss @7653 close

USDCNY Fixing – today’s fixing the biggest “devaluation” including the risk-off August 5 & 6th!

Source: Bloomberg & Saxo Bank A/S

Lead story in Global Time:  Why are Chinese brushing aside Trump's Tweets?

I have read ALL English version of Chinese newspapers....and here story from South China Morning post:

Considering all the President Trump talk of new talks/deal I haven’t found a single notice of this or even mentioning of contact which to me mean they ignore it and it’s very unlikely there is real contact as China condition are clear :

Tariffs must be substantially reduced or eliminated….

China have over and over said there are three (really four) conditions:

  1. The list of good China needs to purchase to reduce trade deficit must be reasonable
  2. Existing tariffs must be substantially reduced or eliminated – which makes September 1st & October 1st critical
  3. The text of the agreement must “respect China’s dignity”
  4. Removal of Huawei sanction

Source: Gavekal

Hence September 1st is still key date and of course October 1st – don’t forget either that October is the 70th Anniversary of China’s Communist Party, now is not the time for China to “fold” especially as President Trump continues to show his weak hand.

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