US delayed tariffs on select imports from China till Dec 15th
plus they agreed to resume talks in 2 weeks time. For Trump to retrace
yesterday and give ground to China would not have been easy. Headlines said
that China and US will talk again in 2 weeks over phone. Now for 2 weeks at
least Trump would not touch the trade war topic and at the same time we could
see China ensuring that Yuan moves towards or below the 7 handle to facilitate
talks.
While there is no consistent trend to a politician’s mind,
it seems that the next two weeks or slightly more can be good for risk
sentiments. This time leading to the talks between US and China should see both
parties maintaining market calm and positivity. Plus the risk off move that we
have seen in the last 10 days would be reversed leading to a decent rally in
risk assets over the next fortnight.
USDINR should overall follow USDCNH. A move towards 70.55
this week should not be a surprise now considering the Yuan move plus squaring
of long positions.
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