United States President Donald Trump announced on Twitter that he will hold off increasing tariffs on $200 billion worth of Chinese products and have a meeting with China’s President Xi Jinping at Mar-a-Lago resort in Florida:

“I am pleased to report that the U.S.
has made substantial progress in our trade talks with China on important
structural issues including intellectual property protection, technology
transfer, agriculture, services, currency, and many other issues.”

“As a result of these very productive
talks, I will be delaying the U.S. increase in tariffs now scheduled for March
1. Assuming both sides make additional progress, we will be planning a Summit
for President Xi and myself, at Mar-a-Lago, to conclude an agreement. A very
good weekend for U.S. & China!”

After the announcement, the
Australian dollar gained 0.4 percent to $0.7157.  Chinese Yuan appreciated by 0.3 percent to
6.6806 yuan against the dollar while the Japanese Yen dipped 0.1 percent to
110.75 yen to the dollar. 

The euro increased 0.1 percent to
$1.1346.  There was no significant
movement with dollar index against a basket of six major currencies and settled
at 96.446.

Trump’s sudden U-turn on imposing
higher tariffs wasn’t a total surprise according to Shinichiro Kadota, senior forex
and rates strategist at Barclays in Tokyo:

“So I expect the market reaction
should be somewhat limited and that the focus would shift back to global
economic fundamentals.”

Gregory Daco, chief US economist at
Oxford Economics, shared a similar opinion:

“We had anticipated such a delay
and believe a handshake agreement in which China will promise to import more
agricultural products, work towards a stable currency and reinforce
intellectual property rights protection will be achieved in the coming weeks.”

“However, we don’t foresee a
significant rollback of existing tariffs, and see underlying tensions regarding
China’s strategic ambitions, its industrial policy, technological transfers and
‘verification and enforcement’ mechanisms remaining in place.”

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