Worries on global economic slowdown ease with data released on Monday, with Chinese manufacturing recovering from recent weakness and the U.S. manufacturing strengthening, while gold prices decline on stronger dollar on Tuesday. As trade talks will resume in Washington on Wednesday after recent talks in Beijing last week, it is stated that trade talks between the U.S. and Japan will likely start in mid-April on trade imbalances that the U.S. President Donald Trump has been complaining about for a long while. In the UK, as Brexit conflict is unlikely to be solved sometime soon, British parliament rejected four notions as alternatives to current Brexit deal for the second time.
Risk sentiment increased and safe haven appeal faded away after manufacturing data released in China and the U.S. eased global slowdown worries while gold prices fell, hitting three-week low on Tuesday.
As of 15:21 GMT+3, gold was trading $1,289.37 an ounce while dollar index was up to 97.38. U.S. 10-year Treasury yield was at 2.474.
IG Markets market analyst Kyle Rodda said the panic on global slowdown eased with recovering Chinese data and added this should be supported by other economic data while he pointed out that the health of economic outlook would be much more clear in a very short term with new data to be released this week. IG Asia market analyst Jinyi Pan said, risk sentiment increased and dollar strengthened due to surprising manufacturing data which pressured gold prices.
Trade talks in Beijing last week will resume in Washington on Wednesday. Chinese government stated that it would extend a suspension of retaliatory tariffs on U.S. goods which it imposed as a retaliation to the U.S. tariffs and suspended on January 1. It is stated that China is trying to contribute to positive progress in trade talks and show good will to reach a trade deal which serves both sides’ interests. Last week, it was claimed that China came with “unprecedented proposals” however disagreement on critical issues is yet to be solved.
In the meantime according to Reuters, trade talks between the U.S. and Japan will likely start on April 15-16. Japanese Economy Minister Toshimitsu Motegi said on Tuesday that he would travel to the U.S. to start trade talks this month. While the U.S. President Donald Trump has been complaining about $69 billion trade deficit with Japan, which is mostly due to car imports, Japanese government is worried that Trump will decrease imports of Japanese cars. It is also possible for the U.S. to impose tariffs on Japanese cars. President Trump is expected to plan his strategy in May, depending on the U.S. Commerce Department report.
In the UK, while it is still uncertain how Brexit will end, British parliament rejected all of four notions including customs union and common market for the second time on Monday. Notions were rejected last week as well and Brexit deal was also rejected for the third time. Thus, British government is expected to request another extension of departure date unless Brexit deal passes the parliament till the EU leaders summit on April 10. If the EU does not approve another extension, the UK will leave the EU on 12th of April without a deal.