Equities are rallying on optimism that the US-China trade dispute might be resolved. A scheduled two days of negotiation was extended by a third day, suggesting things are going well. The arrival of US officials from energy, agriculture and treasury departments is a good sign that discussions are becoming more explicit on topics such as intellectual property and trade deficit. The next step will come at the 2019 World Economic Forum in Davos (22 January), where US President Donald Trump and China Vice-President Wang Qishan will meet.
On the other hand, recent economic releases have pointed to a drop in growth, including a slowdown in manufacturing, with the US ISM manufacturing index at its lowest in 25 months. China faces similar trends, with its manufacturing PMI at its lowest in 19 months. The FX market remained stable, aside from the Japanese yen, which retreated.
