Talks with China will occur before any tariffs are implemented - ANZ

Analysts at ANZ explained that White House trade advisor Peter Navarro said overnight that talks with China will occur before any tariffs are implemented. 

Key Quotes:

"The discussions will occur during the 60-day period when Americans can provide feedback."

"Kudlow said the aim of the talks is “to get to some place where China stops doing what it’s doing in terms of its aggressive attacks on our economy,” but these are just “proposals” at this stage. The market took heart from these comments overnight."

"However, on the other hand, the EU and Japan have asked to join the US Government’s WTO case (launched last week) over China’s alleged discriminatory technology licensing practices, so it seems tensions will continue to simmer on a number of fronts."

"As observers attempt to distinguish bluster from actual intent it seems likely that the trade dispute will continue to be a source of volatility for markets, particularly US commodity futures such as soybeans, hogs, and live cattle, but also equities and risk proxies of all kinds – including the NZD and AUD."

"Meanwhile the US trade deficit widened overnight and looks set to continue to do so, given the strong fiscal stimulus hitting an already stretched economy means demand will need to be met through imports."