How a U.S.-China Trade Deal Can Impact Currencies

The transcript discusses the potential impacts of a trade deal between the US and China, focusing on how it could ease trade tensions and affect global trade dynamics. It also highlights issues related to auto tariffs, particularly concerning Europe, and how these could influence global trade assumptions for 2019. The discussion extends to monetary policy, suggesting that a more optimistic global trade outlook might prompt central banks to consider monetary tightening. Finally, it identifies opportunities for currencies that are globally cyclically correlated, which could benefit from dissipating trade tensions.

What is one potential outcome of a trade deal between the US and China?

• Increased tariffs on European car makers

• Stronger US dollar

• Higher tariffs on Mexican goods

• Reduction in trade tensions

How might a more optimistic global trade outlook affect central banks?

• Lead them to consider monetary tightening

• Encourage them to lower interest rates

• Prompt them to sell foreign currencies

• Cause them to increase tariffs

What is a potential benefit of a more optimistic global trade backdrop?

• Increased global trade tensions

• Decreased interest rates

• Opportunities for globally cyclically correlated currencies

• Higher tariffs on Canadian goods

Which currencies might benefit from easing global trade tensions?

• Currencies from countries with trade deficits

• Currencies tied to gold

• Globally cyclically correlated currencies

• Currencies with high inflation

What impact might central banks have on currencies as global trade tensions dissipate?

• They might reduce currency supply

• They might increase interest rates

• They might devalue their currencies

• They might impose currency controls