To see how FX markets gauge progress in the U.S.-China trade talks look at AUD and JPY price action. One outcome that could see a rally in AUD, a proxy for China's economy, would be the Asian nation agreeing to open up its markets more to U.S. companies and in return, retaining the ability to export to America competitively.
On the other hand, an escalation of conflict could see a rebound in JPY on the back of haven flows. Given the complexity of the issues, a breakthrough is unlikely at this gig. The U.S. delegation led by Treasury Secretary Steven Mnuchin will probably argue the trade relationship with China has been unfair, and an intellectual property dispute adds to that conflict. But there's at least hope tensions won’t escalate. As Commerce Secretary Wilbur Ross put it: "I wouldn’t go to China if I didn’t think there was hope.
Source: Bloomberg Pro Terminal
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