Our 2 major takeaways from the G-20 summit is that the US and China are back on track with trade war talks and whilst these talks are ongoing there will be a ‘ceasefire’ in ‘hostilities’. Furthermore, Trump in a surprising move extended Kim Jung Un an invitation to meet whilst he will be in Korea and meet they did on Sunday. Talks for resolving the nuclear issue are back on! We read this as positive developments and logically risk on should be the theme for next week. Watch the Yens as they may catch a healthy bid, commodities and commodity FX are likely to be well bid as well, as we would expect Chinese equities to be buoyed at the open of this weeks trading. The chart below highlights how investors price in developments in the US/China trade war. You can read more on the G-20 summit here.
1. Optimism and positive developments from US/China trade talks result in Chinese equity strength which in turn favours Commodities and Commodity FX.
2. BCOM Index posted a bear outside day at resistance on Friday but weekend developments positive and may see Friday’s losses reversed, Commodity FX doing well.
