Cancellation of the APEC summit in Chile is not a big obstacle for China and the US to sign a trade deal

Cancellation of the APEC summit in Chile is not a big obstacle for China and the US to sign a trade deal.
So long as a trade deal is on the cards - risk on will be the theme.

The Global Times has tweeted that the cancellation of the APEC summit in Chile is not a big obstacle for China and the US to sign a trade deal as long as they reach one, according to Mei Xinyu, an expert affiliated with the Chinese Commerce Ministry”.

If China and the US were to sign an interim trade deal, as they appear to do so, and top leaders of the two countries were to meet for a signing ceremony, it would be in a neutral third-party country: Mei Xinyu.

US-China 'phase one' trade agreement may not be signed at Chile APEC meeting - Reuters

FX implications:

Neutral/Bullish for risk and supportive of AUD crosses. The Aussie is the one to watch with respect to trade war – China is Australia's largest trading partner in terms of both imports and exports and Australia is China's sixth-largest trading partner and a two-way investment relationship is also developing. The Yen is also one to watch, as investors scramble from risk asset allocations at times of uncertainty when the Yen picks up a safe haven bid.

So long as a trade deal is on the cards, investors will seek a higher return on their capital and thus, AUD/JPY should attract demand - AUD/JPY is currently higher by +0.14% on the day so far. (AUS Consumer Price Index was favourable for AUD overnight, in line with expectations and not poor enough to cement a Reserve Bank of Australia rate cut.

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