United States (US) considering a currency agreement with China as a part of a partial trade deal - Photo by AFP

JAKARTA (TheInsiderStories) – United States (US) considering a currency agreement with China as a part of a partial trade deal. As known, starting today, the officials from the both countries meet this week to complete the trade deal.

As reported by Bloomberg, White House is looking at rolling out a previously agreed currency pact with China as part of an early partial deal that could also see a tariff increase next week suspended, according to people familiar with the discussions.

The currency accord, which the US said had been agreed to earlier this year before trade talks broke down, would be part of what the Washington considers to be a first-phase agreement with Beijing. It would be followed by more negotiations on core issues like intellectual property and forced technology transfers, said the report.

While, Chinese delegation refuses to talk about forced technology transfers. SMCP sources have come with a piece that has sent the Yen on a hike across the board, advancing some 30 pips versus the Greenback.

US and China make no progress on key trade issues in two days of deputy-level talks, said the news portal. The Chinese delegation refuses to talk about forced technology transfers, a core US grievance in the negotiations. And, high-level talks are expected to last for only one day, with Liu He and his team now planning to leave Washington on Thursday.

Also, the Financial Times indicated that China had offered to increase by 50 percent purchases of agricultural products from US farmers. US stocks were elevated on the reports, that had suggested China was open to a limited tariff resolution with the US.

The minutes meeting of Federal Open Market Committee saw a little hopes of a trade deal breakthrough this week. It stated, “And seems we have confirmation now that these trade talks are doomed to fail from the get-go and its back to risk-off. AUD versus JPY is down 0.30 percent on the soured sentiment.”

Financial market developments were driven by an escalation in international trade tensions, said the minutes, growing concerns about the global economic growth outlook, and the prospect of more policy accommodation by central banks.

Nominal Treasury yields posted very large declines in August as investors reacted to the US administration’ announcement of additional tariffs on Chinese goods, along with the depreciation of the Chinese renminbi through the perceived threshold of RMB7 per US dollar and the associated implications of these actions for the global economic outlook.

Treasury yields partially rebounded following better-than-expected incoming economic data in the US and abroad, a perceived reduction in the probability of a no‑deal Brexit, and some positive headlines about trade policy. The market-implied path of the federal funds rate shifted down on net.

Broad equity price indexes were down as much as 6 percent in early August but almost fully recovered by the end of the inter-meeting period. Measures of expectations of the near- and medium-term path for the federal funds rate (FFR) were particularly sensitive to news about US – China trade tensions, while the policymakers had only modest effects on market-based measures of policy rate expectations.

In August, US officially labeled China a currency manipulator, accusing it of using renmimbi to gain “unfair competitive advantage” in trade. China’ Yuan has dropped more than 3.5 percent against the Greenback in 2019. More importantly, China allowed Yuan to depreciate beyond RMB7 per US Dollar, drawing Washington’ ire.

by Linda Silaen, Email: theinsiderstories@gmail.com