Talking Points:
- A lack of details in China's official response to the latest round of US tariffs suggests that the 'tit-for-tat' nature of the US-China trade war may be giving way to a more concilliatory attitude.
- Speculation that China won't escalate the trade war further has risk appetite improving once again, with USD/JPY[1] rallying to its highest level since January 9 - even as neither US Treasury yields nor US stocks make significant advances.
- Sentiment for the US Dollar[2] continues to suggest a neutral outlook after recent price developments.
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The US Dollar (via the DXY[4] Index) is rallying for the fourth consecutive day - its rallied every day this week thus far - as the ebb and flow of the China-US trade war has seemingly swung in a more positive direction. Risk appetite has been bolstered somewhat, with US equity futures pointing higher; although, the US Dollar has outperformed either US Treasury yields or US stocks thus far today.
After the US Trump administration announced plans for tariffs on another $200 billion of Chinese goods, Chinese officials have thus far failed to give a detailed response as they have in the past. This has lead to some to speculate that Chinese officials are looking for a way to ratchet down tensions, ending the 'tit-for-tat' spat that's left market participants increasingly on edge.
As a testament to the change in attitude towards the trade war, traders are reversing the sharp move higher seen in USD/CNH[5] yesterday (the best day since January
