Collinson FX: June 13: Xi refuses to sign off lop-sided trade agreement
by Collinson FX 15 Jun 2025 09:23 NZST
15 June 2025
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Collinson FX: June 13: President Xi bounces unbalanced trade deal
Reservations remain over the latest rendition of the US/China Trade Agreement. Trump announced it was a ‘done deal’ and that China would pay tariffs of 55%, while the US would pay only 10%.
This was not signed off in China by President Xi, so nagging doubts remain. US PPI was softer than expected, further ignited tensions between Federal Reserve’s Chairman Powell and US President Trump.
Trump called Powell a ‘numbskull’ for not cutting rates, as inflation tumbles, while pressure on Powell builds. Powell met with Trump recently and rumours have been doing the rounds, that Powell would be resigning anytime.
The US Dollar weakness continued, with the EUR surging to 1.1600, while the GBP looked to regain 1.3600. UK GDP numbers turned negative, in the latest reading, while the British trade deficit continues to expand.
The weaker reserve allowed the AUD to consolidate above 0.6500, while the NZD look to push 0.6050. NZ and Australia remain extremely vulnerable to the ill-effects of tariffs, while no trade deals are in place, and the US is pushing back against these Countries political and economic antics.
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Collinson FX: June 12: President Trump confirms trade/tariffs agreement reached with China
The US/China trade talks have come to an interim conclusion and Trump has issued a proclamation. He confirmed that an agreement has been reached, although leaders of China and the USA, must sign-off on the agreement. There was a subdued reaction on markets to the seemingly positive news, as details need to be clarified.
Attention now will turn to the US/EU negotiations. US inflation was softer than expected, easing US bond yields and adding further pressure on the Fed, to cut rates immediately. Pressure is building between the Fed and the Trump administration and something has to give.
The US Dollar was softer, allowing the EUR to rally towards 1.1500, while the GBP held 1.3550.The softer reserve saw the AUD to trade around 0.6500, while the NZD consolidates above 0.6000.
These trade dependent commodity currencies, may come under pressure, as the trade spotlight turns on them. They are yet to reach a trade agreement, with the US, and appear to be having political issues with the ‘Big Dog’. Nervous times are ahead.
Collinson FX: June 11: Markets on tenter-hooks on trade negotiations
Trade negotiations between China and the US, extended to the second day in London, leaving markets on tender-hooks. These are the most important trade negotiations and without a deal, global trade wars could easily reignite.
Attention turned to the souring UK labour market, which has steadily declined, since the Labour Government budget. Who would have thought that raising the tax on employment and increasing minimum wages, would deter employers from hiring?
This was bad news for the economy, and those suffering unemployment, but there was a silver lining. Rising unemployment eases the pressure on the labour market and drives recessionary conditions, which is the modern solution to inflation. This will add pressure on to the Bank of England to cut rates further, adding downward pressure on the recently resurgent GBP. The GBP crashed below 1.3500, while the EUR held ground, trading above 1.1400.
All eyes remain on the US/China trade negotiations and the US Dollar regained some ground, forcing the AUD back to 0.6500, while the NZD is retracing towards 0.6000. When the London trade round is complete, attention will again turn to inflation and an important inflation number, is released in the US later today.
Collinson FX: June 10: Hopes Swiss trade deal will be re-inked
US/China trade talks recommenced in London overnight and markets await the outcome, with apprehension.
Expectations are high for a recommitment, to the previously agreed interim trade deal, inked in Switzerland. The hope is that a formalised negotiating process would be finalised, and a long-term agreement put in place. Chinese trade data reflected the disruption in trade, post-‘Liberation Day’, but held up much better than expected.
The massive trade surplus continued and exports still increased by more than 6%, in Q1. The US Dollar was softer, with the EUR regaining 1.1400, while the GBP broke above 1.3550.The weaker reserve allowed a recovery in commodity currencies, with the AUD regaining 0.6500, while the NZD pushed up towards 0.6050. Inflation data out of Europe and the US, will be a key focus this coming week, following the US/China trade talks.
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