The US and China: Who will make the first movement? – MUFG

Last week he continued without contributing clarity about tariffs, including how and if eventually the US and China will sit at the table to at least start negotiating. If, there was some marginal climbing, with restrictions on the Nvidia chips designed for the Chinese market, which led to a sale in the feeling of risk, along with an additional request for comments on the US proposal to collect port rates to container ships made in China, according to the note of the MUFG FX analyst.

Tariff tensions are deepened while conversations between the US and China remain distant

“Although China has established some preliminary conditions for conversations according to the latest reports, the gap between the two powers seems to remain quite large. It is important to point out that the dispersion in expectations does not seem to be confined to China, since there are significantly different readings of the meetings in Japan and the USA after the tariff negotiations.”

“This week, the most important thing to consider for the markets can be how the disagreement between President Trump and the president of the Fed, Powell, and, as such, will also increase the concerns about the exceptional Americanism and the holiness of the US institutions last week, the president of the FED, Powell, adopted a relatively haw that the Fed needs to be sure that a timely pricing increased due to tariffs does not eventually result in persistent increases in inflation over time. “

“Interestingly, this opinion differs from some other members of the FOMC, such as Governor Waller, who focused more on the downward risk for the growth of the US We believe that Trump has the legal authority to do so, but any sign that this will be forced will undoubtedly have a significant impact on the markets and also on the US dollar. “