The markets still entertain a hope that the Washington-Beijing talks will eventually take place especially given the recent reports that the parties are about to hold a meeting in Washington this week.
The participants keep estimating a chance that US Administration raises import duties on Chinese products this Friday following the statement made by the US President Donald Trump on his Twitter. However, South Korean won and Chinese yuan have remained on the downward track against the greenback. Speaking about safe heavens, in particular, Japanese yen and gold, maintain Monday levels so far.
This week, the markets will focus on trading tensions between two major economies, while any aspects of the negotiations to be held in Washington may entail certain response from traders and investors. The volatility in a quite sensitive market can be extra high. If Washington decides to raise the duties (10% now) to 25% this Friday, this move will entail sales of risk assets as investors are concerned about the impact of this increase on already slower global economic growth.
Speaking about the market indices, the S&P 500 collapsed by 0.45% yesterday. Stock markets in China and Singapore posted uptrend at the beginning of today's trading.
In this situation, central banks will be in the market spotlight in the near term.
With renewed fears of trade relations between the leading economies in the world, investors will also pay attention to the central banks that used to indicate external downward risks and adopted a soft monetary policy.
Notably, central banks in Australia, Thailand, Malaysia, Philippines and New Zealand are expected to announce their further monetary policy this week. At the same time, some of the above-mentioned banks can take preventive rate reductions seeing the negative impact on the global economy from Washington-Beijing tensions. As a result, national currencies can face even stronger pressure.