After a very exciting week with statements and decisions of central banks, time will come to an equally important issue related to the trade war between the US and China. In principle, this will depend on whether there will be a global easing of monetary policy or not.
The leaders of the G20 countries will meet in Japan from 28 to 29 June. The most important element of this summit should be the meeting of US and Chinese presidents. The main issue will be whether they will resume talks about the final shape of the trade agreement to avoid further escalation of the trade war. It seems that what we can expect from the G20 summit is the resumption of talks on the agreement, but without any major and detailed declarations. Of course, both parties must make concessions in order to be able to talk about progress. Therefore, it will take even longer for agreement to be signed. It is possible, however, that in the meantime, to further increase the pressure on China, Trump will decide to introduce another round of tariffs on Chinese products.
Progress in trade talks is important because the closer deal is, the lower the need for monetary easing by central banks. The ECB and FED announced the possibility of interest rate cuts, but when it happens and how deep it will be, it will depend on politicians, because they are now influencing the global economy.
Investors' attention may also be caught by the decision of the RBNZ on interest rates. The market consensus indicates that the main interest rate will remain at 1.5 percent. Nevertheless, it must be remembered that the Reserve Bank of Australia is under considerable pressure of further rate cuts, which weakened the Australian dollar. It is possible, therefore, that the RBNZ may also talk about such a scenario. It seems that on Wednesday, June 26, at 03:00, there may be more volatility on currency pairs with the New Zealand dollar.
Daniel Kostecki, Chief Analyst Conotoxia Ltd.
Materials, analysis and opinions contained, referenced or provided herein are intended solely for informational and educational purposes. Personal Opinion of the author does not represent and should not be constructed as a statement or an investment advice made by Conotoxia Ltd. All indiscriminate reliance on illustrative or informational materials may lead to losses. Past performance is not a reliable indicator of future results.
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