- Positive development in China-US trade talks
- What to watch out for today
By Michael Hart
While the financial markets remain in risk averse mode generally, two developments helped stabilise sentiment, mildly, at least. Firstly, Qatar offered to inject investments into Turkey as an act of “friendship” and secondly there was some progress with the US/China trade talks. The International Monetary Fund (IMF) said there is no indication that Turkey is considering to seek its financial assistance, but it urged in a statement that “in light of recent market volatility, the new administration will need to demonstrate a commitment to sound economic policies to promote macroeconomic stability and reduce imbalances.”
Instead, Qatar has pledged USD 15 billion of direct investment in Turkey to help strengthen the Lira. President Recep Tayyip Erdogan’s spokesman, Ibrahim Kalin, tweeted: “Turkish-Qatari relations are based on solid foundations of true friendship and solidarity.”
Positive development in China-US trade talks
China’s Ministry of Commerce said in a statement that it is accepting an invitation by the US to resume trade discussions. Chinese Vice Commerce Minister, Wang Shouwen, will meet with the US Secretary for International Affairs, David Malpass, in late August. In the statement, China reiterated that “it opposes unilateralism and trade protectionism and does not accept any unilateral trade restrictions”. And, “China welcomes dialogue and communication on the basis of reciprocity, equality and integrity.” The news is certainly a positive development. But such a low level meeting shouldn’t carry much significance in the near term. The trade war is on and the meeting is more of a gesture and lacks real substance at this point.
What to watch out for today
On the data front, UK Retail Sales and Eurozone Trade Balance will be featured in European session. As expected, there was an increase in UK retail sales figures for July, rising by 0.7% after a surprise fall for June. Food sales were boosted by the good weather and online sales were particularly strong. Clothing sales reached their highest growth since December 2017. Many retailers launched new promotions after a disappointing June. Total spend is increasing, which is a positive sign for the UK economy, despite pressure on the high street and consumers’ pockets as inflation rises ahead of wage growth.
Later in the day, the US will release Housing Starts and Building Permits, following yesterday’s busy day of US data. However, it seems that not much will slow the Dollar down anytime soon, so its impact is likely to be limited.