Markets are waiting for the outcome of negotiations between the US and China

Waiting for the result of a new meeting between Washington and Beijing on the issue of trade duties is seen by the markets as a positive step that could result, if not by a final compromise, then at least lead to a truce.

The US responded that it is ready for negotiations, but President D. Trump made it clear that if the compromise was not reached, the States could expand customs duties on half of all Chinese imports. The news about the willingness of Americans to enter into negotiations has already led to a strong growth of Chinese stock indices and the same positive demand for risky assets. Assessing this state of affairs, we can say that the European stock markets will open in the "green" zone on Tuesday.

In the foreign exchange market, the US dollar, of course, is under pressure in such a situation. Up to this point, it has received good support precisely because of rising tensions in the markets and its status as a safe-haven currency. But on Tuesday it is actively sold, just on hopes that a compromise will be reached between the two largest economies in the world. Markets reasonably believe that the continuing tension between Washington and Beijing harms not only the economies of the US and China, but also the world, so investors hope that common sense will win.

Probably, he still believes that not all measures of influence, economic pressure to achieve preferences are used. It is likely that if, following the results of the meeting to be held this week, no breakthrough is achieved, and the United States in addition will announce new tariffs on half of Chinese imports, then the demand for risky assets will fall and the US dollar will again be in favor , but until the outcome of the meeting, it will probably remain under widespread pressure.

The forecast for Tuesday:

The EURUSD pair is trading above the level of 1.1500. It grows on the wave of demand for risky assets and dollar sales in investors' expectations of a positive outcome of the meeting between the US and China. If the pair holds above this level, it is likely to continue its local growth to 1.1575. At the same time, a decrease below this level will lead to its fall to 1.1445.

The USDCAD pair is above 1.3020. The pair may decline in the wave of rising demand for risk and the depreciation of the dollar. Pressure on the pair may also be exerted by the continued rise in oil prices. In this case, the pair may fall to 1.2975 after overcoming the mark of 1.3020.

The material has been provided by InstaForex Company -