US futures nudge lower on the session

Geopolitical tensions in the Middle East are still running high but at least likely to hold through the weekend. But if anything, it is the relative silence from China this afternoon that is something that stands out so far today. There’s only minimal commentary from both the foreign and commerce ministries, none providing too much detail.

Even the Global Times describes the situation as such:

“Asked whether China can confirm US President Donald Trump’s claim in a social media post that the US has reached a deal with China and China will supply rare earths magnets and others to the US, Chinese Foreign Ministry spokesperson Lin Jian on Thursday stressed that the China-US trade meeting was held under the strategic guidance of the two heads of state, and the two sides reached a consensus in principle on the framework of measures to implement the important consensus reached by the two heads of state in their phone call on June 5 and consolidate the results of the Geneva economic and trade talks, and made new progress in resolving the economic and trade concerns of both sides. Lin reiterated that China always honors its commitments with concrete actions. Now that a consensus has been reached, both sides should abide by it.”

Notice how the wording sidesteps confirmation on Trump’s claim of a “deal” and any major concession on rare earth supplies. That’s certainly interesting to say the least.

The drop in US futures might be to do with some caution as well but the above development is something to be wary about. It once again speaks to the notion that when it comes to interpreting events with Trump, there’s always two sides to the coin.

One positive story for risk at least is that we are likely to see the US extend the deadline for trade deals beyond 9 July. That so long as the countries involved do have some communication on trade prior to that deadline. But we’ll see how things go in the weeks ahead. TACO time?

This article was written by Justin Low at www.forexlive.com.