Moody's on USTR: Relations between the US & China to remain "contentious", "punctuated," "occasional steps" towards compromise

• Markets switch risk-on but Moody's warns of a bumpy road ahead.
• Chinese, U.S. chief trade negotiators held phone talks.

The US Trade Representative (USTR) Lighthizer's office in a published statement today announced that additional tariffs on some Chinese imports, including cell phone and laptop computers, will be delayed until December 15.  Trump says he delayed tariffs for Christmas season in case it had an impact on shopping.

There were also reports that Chinese, U.S. chief trade negotiators held phone talks. China's Lui He apparently spoke with Lighthizer and Mnuchin. CNBC reported that Lui-Lighthizer talk took place at US's invitation. Trump also hinted that China has agreed to buy more agricultural products.

"As usual, China said they were going to be buying “big” from our great American Farmers. So far they have not done what they said. Maybe this will be different!"

The sentiment has turned positive on the trade front and the markets have responded in kind - most notably in the commodity complex, US stocks, the Yen and CHF.  More news is following the Chinese is working to keep its currency stable and all of a sudden, we are back to risk-on. 

However, those with a more objective view warn that markets should perhaps not get too ahead of themselves, as they always like to do.  For example, Moody's has said that they expect relations between the US & China to remain "contentious, punctuated with occasional steps towards compromise."

FX implications

Once the hysteria pipes down such sentiment should take the sting out of the fierce corrections in risk-FX for the bears.