Hopes for a thaw in US-China trade tensions gained momentum Friday after Beijing confirmed that Washington had recently conveyed, repeatedly, a desire to start negotiations. “The US has recently sent messages to China through relevant parties, hoping to start talks,” China’s Commerce Ministry said, adding that “China is currently evaluating this.” The ministry noted that the US has repeatedly expressed interest in addressing tariff issues. Markets took the signals as a tentative step toward dialogue, with oil prices and US equity index futures moving higher on optimism that the world’s two largest economies might be preparing to re-engage. In Washington, Senator Marco Rubio echoed the sentiment, saying “the Chinese want to meet and talk,” suggesting the ice may finally be starting to break. Investors broadly interpreted the tone shift as a potentially face-saving off-ramp for Trump, and a developing path forward for China, particularly as economic cracks begin to emerge more visibly in the recent data on both sides of the Pacific.
Still, Beijing's tone was far from conciliatory. China’s Commerce Ministry stressed that “if the US does not correct its unilateral tariff measures, it has no sincerity at all” and that Washington must be “prepared to take action in correcting erroneous practices, including cancelling unilateral tariffs.” While China confirmed it is open to dialogue, officials made clear that any talks would be conditional on tangible US concessions. These statements, some analysts argue, amount to Beijing effectively demanding a full rollback of Trump-era tariffs as a precondition for serious engagement — a stance that could complicate efforts to rekindle negotiations.
Earlier in the session, Japanese Finance Minister Katsunobu Kato made headlines by suggesting that Japan’s substantial holdings of U.S. Treasuries could be considered a potential bargaining chip in trade negotiations with Washington — though he was quick to clarify that there is no intention to deploy that option at this stage. Japan’s lead negotiator on tariffs, Ryosei Akazawa, struck a more measured tone, and notably indicating that the next round of talks may not take place until after mid-May — a sign that a breakthrough is unlikely anytime soon. Both officials confirmed that foreign exchange issues, i.e. the yen, were not discussed. Later, Prime Minister Fumio Ishiba reinforced Japan’s longstanding position, stating that Tokyo, like Beijing, continues to urge the U.S. to remove its tariff measures.
Australia heads to the polls on Saturday, May 3, with Prime Minister Anthony Albanese still favoured to retain government — though polling remains tight, and the prospect of a minority government cannot be ruled out. On the economic front, March retail sales data released today showed a modest improvement from February but fell short of expectations, while Q1 retail sales were flat overall — a notably weak result. Meanwhile, producer price inflation (PPI) for the quarter came in above headline CPI, highlighting lingering cost pressures. However, none of the data releases shifted market expectations for a 25 basis point rate cut from the Reserve Bank of Australia when it meets on May 19–20..
As mentioned, oil and equities were broadly underpinned amid easing US-China tensions, while major currency pairs saw mixed performance. USD/JPY briefly spiked toward 145.80 but later retraced, ending the session little changed. Elsewhere, the US dollar weakened against most G10 peers, with the AUD, GBP, NZD, and CAD all posting gains. EUR/USD was a relative laggard, advancing more modestly compared to the broader move.
After a gap lower to open Globex evening trade ES soared on the China news.
The above is a CFD that tracks ES.
This article was written by Eamonn Sheridan at www.forexlive.com. Read More Details
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