The turning point in the relationship between the US and China

US President Donald Trump and China, Xi, Jinping, have already indicated that they are ready for the long-awaited meeting between them during the G20 this week in Argentina.

The two largest world economies were involved in a trade war that has continued to grow and widen its impact on the financial markets and the growth of the world economy. Last Thursday, Trump told reporters that China wanted a deal to be made sooner rather than later. The latest tariffs imposed by the United States against imports of Chinese goods amounted to $ 200 billion. The G20 will be held in Buenos Aires, Argentina, which, however, considering everything else that will be discussed, will focus entirely on the personal encounter between Trump and Ping.

With regard to Emerging Markets (EM), this will also be a turning point. Investors will look for signs of a possible ceasefire between Washington and Beijing when leaders meet the G20. Even the smallest steps taken to resolve the trade conflict will be positively met by the markets.

"If we get end-of-month indications that there will be talks or joint work between the US and China, instead of further escalating the conflict, this may be a catalyst for further weakening the dollar," says Daniel Morris, senior investment strategist at BNP Paribas Asset Management in London. "It should also support emerging markets," Morris said.

Also, investors will follow closely the speeches of Fed Chairman Jerome Powell and Vice President Richard Clarida, especially as traders began to assess the likelihood of a slowdown in interest rate rises.

Source: Bloomberg Finance L.P.

Charts: Used with permission of Bloomberg Finance L.P.

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