The big news overnight is that the US and China have finally signed the much awaited “phase-one” trade deal. Market sentiment has remained positive with equity markets reaching new highs, while currency markets have been fairly contained with the deal signing largely priced in already. The Kiwi Dollar has drifted lower, despite broad US Dollar weakness, and begins the day down against most major currencies.
Trade Deal Signed
The US and China have announced an initial trade deal that will roll back some tariffs and boost Chinese purchases of U.S goods and services. However, the deal will leave in place 25% tariffs on $250 billion worth of Chinese industrial goods and components used by U.S manufacturers. Currency reaction to the announcement has been limited with the US dollar moving slightly lower.
UK Inflation Weaker Than Expected
UK inflation numbers fell to 1.3% annualized in December, its weakest since November 2016. With a few BOE members already turning dovish, and economic data dwindling, markets are now treating a BOE rate cut as a matter of when not if.
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