The verdict is in
It's taken awhile but the market has decided that the report of a China offer to cut the US trade deficit is a positive development, even though the US rejected it.
USD/JPY is at the highs of the day, up 42 pips to 109.68. The S&P 500 is up 26 points to 2662, also a high of the day.
The commodity currencies aren't quite sure what to do. The problem here is that if China decides to quadruple imports from the US, does that mean they aren't buying from someone else? You would have to worry that would mean fewer raw materials from places like Australia and Canada.
At the same time, those are fungible commodities so how badly could it hurt?
Looking ahead, note that China is out with industrial production, retails sales and GDP on Monday while US markets are closed. I think that sets up a negative move for risk assets.
