Canadian PM Trudeau to US Pres. Trump: Don’t sign US-China trade deal until Canadians released – SCMP

The South China Morning Post (SCMP) relies on the French-language TV network TVA to convey that the Canadian Prime Minister Justin Trudeau has asked the United States to hold off on any final trade agreement with China until two Canadians detained in China have been released. The news also says that the detention of Canadians appears to be an attempt to pressure Ottawa to release Huawei executive Meng Wanzhou, who was arrested in Vancouver at the request of the US.

Key quotes

No evidence has been provided in the Kovrig and Spavor cases and they have not been allowed access to family members or lawyers while in Chinese custody.

US Secretary of State Mike Pompeo has said Meng is not a bargaining chip in US-China trade talks.

Meng’s detention severely damaged Beijing’s relations with Ottawa. Meng is accused of lying to banks about the company’s dealing with Iran in violation of US trade sanctions. She is out on bail in Vancouver and living in her multimillion-dollar mansion awaiting extradition proceedings.

FX implications

While it's too late for Canada to have any significant impact on the US-China trade relations as both sides are eager to progress, news like this should negatively affect the market’s risk tone. Even so, the US 10-year treasury yields and USD/JPY stays mostly unchanged after the release.