This week's Scoreboard reflected increased market attention to issues related to the U.S.-China trade relationship, with both Protectionism and U.S.-China Trade War registering major gains. Though North Korea continues to dominate news headlines, potential economic disruption between the two powers could prove more consequential to markets. With a U.S. investigation into intellectual property infringement continuing to rankle Chinese officials, Trump's Commerce Secretary Wilbur Ross met with Premier Li Keqiang in Beijing last week. Mr. Ross pressed for major changes to what he called a “lopsided” trade relationship. Secretary of State Rex Tillerson visited shortly thereafter to discuss North Korea and trade.
A Predata backtest shows that during the last year, heightened volatility in the US-China Trade Regime signal, which captures concern over protectionism, has preceded gains in the CNY/USD currency pair.