China US Trade Recovery Both China and the US are working to speed up the results from the London framework. There’s a strong push for cooperation in their trade relations. It’s also recognized that tactics like extortion and coercion do not help. Instead, dialogue and collaboration are recommended for future trade. Early Signs of Stability In the first half of the year, China’s trade with the US has decreased significantly in yuan terms. Exports from China to the US fell by almost ten percent, and imports from the US declined by just under eight percent. Overall, the total trade volume dropped about nine percent compared to the same period last year. Recent comments suggest that commercial ties may be stabilizing. Efforts to follow through on the London discussions indicate some level of policy coordination continues behind the scenes. Both countries have publicly supported stronger engagement and rejected the tougher, confrontational strategies of the past. Rather than using threats or retaliatory actions, there is a focus on calm discussions aimed at enhancing trade channels in a balanced manner. When we consider the broader economic conditions and currency movements, several key points emerge. The renminbi is facing pressure, mainly due to ongoing capital outflows and differing interest rates compared to major trading partners. This creates real pricing impacts on yuan-based contracts, especially for shorter trade cycles. In the coming two weeks, traders should pay attention to both bilateral flows and comments from monetary authorities. These could provide insights into potential changes in capital controls or interest rates. It’s wise to take a cautious approach to leveraged foreign exchange plays involving the renminbi, particularly when there are long positions in USD, unless there’s clear communication from central banks or improvements in trade balances. Some may consider a relative-forward strategy, comparing volume declines with price stability metrics. Despite the overall contraction in numbers, the shift in tone from authorities, emphasizing steady cooperation, indicates that sudden interventions or unexpected tariff changes are unlikely in the short term. Historically, volatility often follows diplomatic tensions. However, with both countries supporting ongoing engagement, short sellers betting on panic-driven market shifts may end up at risk. Contract structuring should focus on rollable, low-theta instruments linked closely to fixed trade route indices, rather than speculative bets on cross-currency movements. Currently, trends in trade flows and a shared message suggest a pause on harsher tactics. Position entries should reflect this pace and aim at gradually increasing volumes rather than anticipating further disruptions. Create your live VT Markets account and start trading now.

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