(17 JULY 2018)DAILY MARKET BRIEF 2:EU and China confirm their willingness to deepen strategic partnership

Donald Tusk, President of the European Council, and Jean-Claude Juncker President of the European Commission, recent travel to Beijing for the 20th EU-China summit in Peking was largely worth it. Both delegations confirmed their common view with regard to free trade, multilateralism and international order, mentioning that reforms need to be undertaken.

As the Trump administration intensifies trade sanctions against both economic forces, China and EU affirm their concerns of the measure and support joint effort to balance its impact. Despite writing orienting the summit towards an attempt to build an “anti-US alliance”, the statement needs be amended.

Indeed, as the impact of tariff measures impact both nations differently due to distinct exporting industries to the US and import measures would necessarily concern different products, joint actions would not necessarily be effective. Instead, both nations confirmed the view that targeting the US as a threat is at the very opposite of an EU – China cooperation.

During the summit, EU and China leaders agreed a joint statement concerning foreign and security reinforcement, modernization of WTO rules, common support on climate change by signing a joint Memorandum of Understanding on Circular Economy ahead of COP24 summit in December 2018 and hold a common view with regard to Middle East (i.e. Syria, Iran) and the North Korean nuclear issue.

As the US – Russia summit in Finland ended on a poor note on Trump side due to disappointing response with regard to Russian meddling in US 2016 elections, the USD is plummeting against major pairs. The USD/CNY is losing ground, currently trading at 6.6798 and expected to approach yesterday lows along 6.670.

By Vincent Mivelaz