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

 

Steen Jakobsen, Saxo Bank, Twitter: @Steen_Jakobsen and @SaxoStrats  - webside: https://www.home.saxo/insights/news-and-research/macro

 

Today update online: https://www.home.saxo/insights/content-hub/articles/2019/08/27/macro-digest-china-fix-usdcny-higher-and-totally-ignore-overtures-by-president-trump

 

 

 

What: The Chinese is ignoring all of overtures made by Donald Trump & 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 & 6^th!

 

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 1^st & October 1^st critical
3. The text of the agreement must "respect China's dignity"
4. Removal of Huawei sanction (this was add post the initial talks)

 

Source: Gavekal

 

Hence September 1^st is still key date and of course October 1^st – don't forget either that October is the 70^th 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.

 

 

Other Asian links:

 

https://www.asiatimes.com/2019/08/article/trump-talks-trade-peace-but-theres-no-deal-in-sight/

 

https://www.channelnewsasia.com/news/international

 

https://www.straitstimes.com/global

 

http://www.chinadaily.com.cn/

 

http://www.globaltimes.cn/

 

http://www.xinhuanet.com/english/

 

http://en.people.cn/

 

 

Med venlig hilsen  |  Best regards
Steen Jakobsen  |  Chief Investment Officer

 

Saxo Bank A/S  |  Philip Heymans Allé 15  |  DK-2900 Hellerup
Phone: +45 39 77 40 00  |  Direct: +45 39 77 62 23  |  Mobile: +45 51 54 50 00

 

https://www.home.saxo/insights/news-and-research/authors/steen-jakobsen

 

 

 

 

 

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