USD: Trade optimism a positive development – Danske Bank

Jens Peter Sørensen, senior analyst at Danske Bank, suggests that the US-China trade optimism has so far seemingly proved a USD positive.

Key Quotes

“We see two possibly transitory reasons for this. First, recent signs that US activity has indeed been hit by the trade war suggest that a deal would be positive for US activity. Second, China could offer to buy more US goods over some period as part of a deal which is clearly also US(D) positive. However, we stress that over the medium term, a trade deal could become a net positive for EUR/USD as it would soothe the eurozone economy, partly via a recovering China, as well as putting pressure back on USD (rather than tariffs) to bear the burden of the current account adjustment.”