2025 Market Outlook: Key January Events to Watch 
China's Refining Industry Faces Major Shakeup Amid Challenges 
Oil Prices Dip Slightly Amid Focus on Russian Sanctions and U.S. Inflation Data 
European Stocks Rally on Chinese Growth and Mining Merger Speculation 
US Futures Rise as Investors Eye Earnings, Inflation Data, and Wildfire Impacts 
UBS Predicts Potential Fed Rate Cut Amid Strong US Economic Data 
U.S. Treasury Yields Expected to Decline Amid Cooling Economic Pressures 
U.S. Banks Report Strong Q4 Profits Amid Investment Banking Surge 
S&P 500 Relies on Tech for Growth in Q4 2024, Says Barclays 
Geopolitical Shocks That Could Reshape Financial Markets in 2025 
Bank of America Posts Strong Q4 2024 Results, Shares Rise 
U.S. Stocks vs. Bonds: Are Diverging Valuations Signaling a Shift? 
Global Markets React to Strong U.S. Jobs Data and Rising Yields 
Mexico's Undervalued Equity Market Offers Long-Term Investment Potential 
Stock Futures Dip as Investors Await Key Payrolls Data 
Gold Prices Slide as Rate Cut Prospects Diminish; Copper Gains on China Stimulus Hopes 
The US-Chinese trade negotiations were not exactly simple so far, but now the whole thing is getting even more complicated. After the House of Representatives almost unanimously passed the Hong Kong Bill that envisages sanctions against China should the status of Hong Kong as a special administrative region be under threat the trade negotiations have become almost inseparable from the events in Hong Kong.
On the other hand, Chinese President Xi Jinping broke his silence on trade talks, and says that Beijing wants to work for a trade deal with the United States but is not afraid to "fight back" to protect its own interests. “We want to work for a ‘phase one’ agreement on the basis of mutual respect and equality,” Xi said. However, President Trump later responded: “I told President Xi, ‘This can’t be like an even deal. We’re starting off from the floor and you’re already at the ceiling'.” Such rhetoric indicates that there is little chance that both sides could find a balancing point any time soon, although China is making some progress on intellectual property protection as over the weekend the government announced some new measures to improve the IPR process.
However, the sticking points remain as China does not want to commit a specific amount of farm goods purchase and the US is reluctant to roll back existing tariffs. For the FX markets, neither "good news" nor "bad news" have big impact for now. It seems only "breaking news" can move the market.
Amid such a geopolitical turmoil, although USDCNH has resumed its bull-run from last week or so, and the pair has jumped above 21DMAs but for today little edgy, trading at 7.0332 levels.
Trade Strategy: At this juncture, we remain short in CNH via 3-month (7.00/7.25) debit call spread. If the scenario outlined above unfolds, we will re-assess our stance but at the moment there are no changes to our CNH recommendations. The positively skewed IVs of 3m tenors indicate that the upside risks of USDCNH are foreseen, OTM call bids up to 7.20 (refer above chart, spot reference: 7.0332 levels). Courtesy: Sentrix & Commerzbank
