On Monday, U.S. and Chinese officials gathered in London. When they announced the possibility of a limited trade deal, global markets listened. Those negotiations, which are extremely important for the state of international economic relations, began their second round Tuesday. This is an encouraging sign that indicates that both parties are serious and intent on reaching an agreement. All of this pontificating happens in a reality where participants in the market are currently obsessed with watching all economic data and currency fluctuations.
Predictably enough, on the same day that these trade talks kicked off, the EUR/USD currency pair experienced incredible stability. It remained just above the 1.1400 level for the early US trading session. For the duo, demand was lacking in some key areas, building for erratic trade at best. EUR/USD remained firm above 1.1400 all day. It was a tight band in which to bounce, reflecting the overall skittish tone of the market.
With all eyes still on the outcome of US-China negotiations, traders turned their attention domestically to some important Australian economic data out this week. The Australia real monetary index, which is expected to be strong, will help put a character on the country’s economic confidence going forward. The currency pair of AUD/USD displayed powerful resilience with the price being held above the 0.6500 mark. That stability held even as contrary trade talks played out.
TSLA–Tesla Inc.–sparked extreme volatility this week. After enduring a challenging one-day market sell-off of 17%, the share price was under $274 by late Wednesday afternoon. Earlier this week TSLA crossed that threshold and headed above $332. Yet both changes in investor mood and overall market direction led to its downfall.
Due to the fundamental market conditions at play today, this potential outcome in US-China negotiations would have severe consequences for market dynamics. Investors have their eyes fixed on the results of these negotiations. The implications of these findings may profoundly reorder economic predictions and alter future trading strategies. These negotiations would have a major impact on key currency pairs like EUR/USD or AUD/USD. Both pairs have plenty of historical precedent to show varying degrees of responsiveness to geopolitical changes.