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US and China closer to trade deal, Aussie inches higher on the news

US and Chinese officials move one step closer to resolving e issues, inching toward a trade deal.

An end to the long-standing trade dispute could be around the corner, with China’s vice premier Lui He preparing to meet with US trade representative and US treasury on Wednesday.

The Washington talks are part of a range of meetings over the past month.

Talks nearing "end-game stage"

Executive vice-president for international affairs at the US chamber of commerce has said, ‘We’re getting into the end-game stage,’

‘Ninety per cent of the deal is done, but the last 10 per cent is the hardest part, it’s the trickiest part and it will require trade-offs on both sides,’ he told reporters on Tuesday.

Key issues

Top officials are still haggling over how to enforce the deal. However, the main issues remaining are over the fate of US levies on Chinese goods and the US ensuring China abides by the deal.

Analysts say China and the US could decide to extend the negotiations, possibly until the G20 summit in Japan at the end of June, if talks don’t end in a resolve.

According to Financial Times sources, the deal being considered could include a ramp-up in Chinese purchases of US goods to narrow the growing bilateral trade deficit. It could also include a series of measures by Beijing to open its market to foreign businesses and digital trade.

Washington wants to use Trump’s $250 billion tariffs imposed on China as leverage, in order to pressure Beijing to comply with a deal. China, however, wants to see the tariffs removed immediately.

Mr Lighthizer is insisting on Washington’s right to impose punitive tariffs on China if there is a violation of the agreement, and a guarantee that China would not retaliate with its own tariffs.

Currencies soar over deal news

Currency markets have reacted positively to the news, with the report likely to further underpin AUD/USD sentiment

AUD/JPY is higher upon the news moving from $78.47 to $79.14 at time of writing.

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