Trump says Russia sanctions lift possible; will not commit to ‘one China’ policy

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U.S. President-elect Donald Trump said in an interview with the Wall Street Journal that he would keep intact sanctions against Russia “at least for a period of time,” and that he wouldn’t commit to the “one China” policy until he sees progress from Beijing in its currency and trade practices.

In excerpts from an hour-long interview published by the Journal on Friday, Trump said: “If you get along and if Russia is really helping us, why would anybody have sanctions if somebody’s doing some really great things?”

Trump suggested he might do away with the sanctions – imposed by the Obama administration in late December in response to Moscow’s alleged cyber attacks – if Moscow proves helpful in battling terrorists and reaching other goals important to Washington, the Journal reported.

Trump told the newspaper he is prepared to meet with Russian President Vladimir Putin some time after he is sworn in on Jan. 20.

“I understand that they would like to meet, and that’s absolutely fine with me,” he said.

Asked if he supported the “one China” policy on Taiwan that has underpinned U.S. relations with Beijing for decades, Trump told the Journal: “Everything is under negotiation including One China.”

Trump angered the Chinese by taking a congratulatory phone call after his election win from Taiwan’s leader and questioning the “one China” policy.

The United States has acknowledged the Chinese position that there is only one China and that Taiwan is part of China.

Trump has said in the past he would label China a currency manipulator after he takes office. In the interview, he said he wouldn’t take that step on his first day in the White House. “I would talk to them first,” he said.

“Certainly they are manipulators,” he added. “But I’m not looking to do that.”

But he made plain his displeasure with China’s currency practices. “Instead of saying, ‘We’re devaluating our currency,’ they say, ‘Oh, our currency is dropping.’ It’s not dropping. They’re doing it on purpose,” he said, according to the Journal.

“Our companies can’t compete with them now because our currency is strong and it’s killing us,” the Journal quoted Trump as saying.

China’s Foreign Ministry responded on Saturday by saying the “One China” principle was non-negotiable and was the “political basis” for China-U.S. relations.

“We urge the relevant parties in the United States to recognise the high degree of sensitivity of the Taiwan issue and abide by commitments made by successive U.S. administrations from both parties to pursue the One China policy … and properly handle the Taiwan issue so as not to affect the stable development of China-U.S. relations and cooperation between the two countries,” spokesman Lu Kang said.

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Briefing highlights

U.S. dollar’s woes send loonie higher
Toronto, Hamilton see record home price gains
Vancouver housing slump deepens

Loonie shoots higher

The U.S. dollar is in broad retreat, in turn driving the loonie skyward.

President-elect Donald Trump’s news conference Wednesday sent the U.S. currency down as he failed to give many details about key fiscal policy issues that investors were looking for.

“After a bounce in the U.S. close, USD has sold off hard again in Asia and is back at the lows hit during Trump’s press conference,” said Royal Bank of Canada senior currency strategist Elsa Lignos.

Overnight and into the morning hours, the Canadian dollar has in turn traded in a fairly wide range, as low as 75.85 cents (U.S.) and as high as 76.73 cents, falling back closer to the 76-cent mark by midday.

It’s not just the U.S. dollar, but oil prices are helping to push the loonie higher.

“Today’s headlines are both favourable for a stronger loonie,” said London Capital Group senior market analyst Ipek Ozkardeskaya.

“The broad-based sell-off in the U.S. dollar and the recovery in oil prices are the major factors driving the loonie to three-month highs against the greenback.”

There’s so much going on, from the lack of fiscal details, the potential flare-up with China after Rex Tillerson, Mr. Trump’s nominee for Secretary of State, and the “Russian spy shenanigans,” as Ms. Ozkardeskaya put it. Not to mention Mr. Trump’s latest attack on the pharmaceutical industry.

“Among the circus of Russian hacking fake news and alike, the big losers from yesterday’s speech appear to be pharmaceuticals and car makers, with Trump expressing the will to bring down drug costs and impose a large border tax on firms moving operations abroad to then sell back into the U.S.,” said IG market analyst Joshua Mahony.

“Perhaps the biggest loser from yesterday’s speech was the U.S. dollar, which has been slammed throughout the night,” he added.

“The weakness evident in both the dollar and stock markets alike centres on the unwillingness of Trump to discuss in any detail the fiscal stimulus package which has proven the number one driver of optimism throughout the markets post-election.”

It’s interesting because, as Bank of Nova Scotia strategists Shaun Osborne and Eric Theoret noted, little has actually changed.

“The Trump dump reflects market disappointment that more information on the new administration’s economic and fiscal plans were not divulged, which has cast some doubt over the broader reflation trade (higher yields, stronger equities, rising USD),” they said, referring to the U.S. dollar by its symbol.

“It is early days for the Trump administration, however, and still early in the year,” they added.

“Our broader thesis of USD remaining relatively strong on the basis of relatively superior growth and relatively tighter monetary policy over the course of the year remains intact.”

Globe Talks: The Canadian economy under Trump. Join us on Jan. 19 for a live event. Get tickets here

Toronto housing market surges

Toronto’s housing market is chalking up fresh records as Vancouver’s slump deepens.

Toronto prices rose in December at a record pace of 19.7 per cent from a year earlier, according to the latest reading of the Teranet-National Bank home price index Thursday.

Vancouver prices also rose from a year earlier, by a strong 17 per cent, but the story there lies more in the monthly performance.

Prices in Vancouver have been easing as sales slump, particularly in the wake of a new provincial tax on foreign buyers of Vancouver area homes.

Thus, prices in Vancouver slipped 0.8 per cent in December from November, marking the third straight drop for a cumulative 2.8 per cent.

In Toronto, prices rose 1.2 per cent from November, marking the 11th consecutive increase.

“National house price inflation has shed some momentum in recent months as Vancouver continues to deflate,” said Marc Pinsonneault of National Bank.

“Canada’s priciest city experienced its third consecutive monthly decline, and more is in store,” he added.

“The price drop so far far was mostly concentrated in dwellings other condos. This is consistent with house sales declines (since their February peak) mostly concentrated in detached dwellings.”

Here’s the cross-country showing for others on a monthly basis: Victoria, up 1.2 per cent, Quebec City and Calgary each up 0.6 per cent, Hamilton and Halifax each up 0.4 per cent, Ottawa-Gatineau 0.3 per cent, and Edmonton 0.1 per cent.

Prices fell 0.5 per cent in Montreal and 1.2 per cent in Winnipeg.

The annual reading: Prices climbed 17.7 per cent in Victoria, a record 17.5 per cent in Hamilton, 3.6 per cent in Ottawa-Gatineau, 3.4 per cent in Winnipeg, 1.5 per cent in Halifax, 0.8 per cent in Montreal, 0.6 per cent in Cagary, and just 0.1 per cent in Edmonton. Prices in Quebec City fell 0.7 per cent.

Mr. Pinsonneault and other economists believe Toronto is headed for a cooling period amid new federal tax and mortgage rules. Economists forecast, though, that price growth will simply ease, rather than an outright contraction.