A lack of major economic releases didn’t stop Asian session traders from buying and selling currencies like there’s no tomorrow. What’s up with that?!
- NZ posts 263M NZD trade surplus vs. 200M expected, 156M NZD deficit in March
- Dollar continues decline after not-so-hawkish meeting minutes
- Trump administration launches investigation into possibly imposing tariffs on car imports
- North Korea threatens to call off June summit
U.S. officially probes auto imports
Just hours after President Trump tweeted about it, the U.S. Commerce Department confirmed that it’s launching an investigation under Section 232 of the Trade Expansion Act of 1962 into whether or not imports of vehicles and auto parts harm national security.
Remember that Section 232 gives the U.S. president the power to impose tariffs on imports that imperil national security. And in his statement, Commerce Secretary Wilbur Ross shared that “There is evidence suggesting that, for decades, imports from abroad have eroded our domestic auto industry.”
If implemented, higher tariffs on auto imports would negatively affect imported car brands like Toyota, Nissan, Hyundai, and Honda. In fact, auto exporters Japan, Korea, and China have said that they’re already monitoring updates on the investigation.
Not everyone is panicking, however. Some analysts have remarked that Trump might be using the decision to court voters from manufacturing states such as Michigan and Ohio ahead of the mid-term elections.
Meanwhile, others note that the administration could also be using the investigation to pressure Canada and Mexico, as well as other trading partners like the EU into speeding up the trading negotiations.
Risk aversion continues
Bluff or not, the Asian markets didn’t appreciate the relatively abrupt trade investigation announcement and its potential impact on global auto traders.
Add that to the not-so-hawkish FOMC statement and North Korea possibly ghosting Trump in the June meeting and you’ve got a pretty bearish trading session.
- Nikkei is down by 1.23% to 22,411.4
- ASX 200 is up by 0.06% to 6,027.0
- Hang Seng is up by 0.07% to 30,687.0
- Shanghai index is down by 0.04% to 3,167.827
Meanwhile, gold climbed as the dollar lost popularity while crude oil prices continued their slide after a surprising buildup in crude stockpiles printed during the U.S. session.
- Gold is up by 0.16% to $1,295.28
- Brent crude oil is down by 0.19% to $79.49
- U.S. WTI is down by 0.26% to $71.62
Major Market Mover(s):
The low-yielding yen remained the top pick for Asian session traders, as they adjust to the relatively abrupt car import investigation from the U.S.
EUR/JPY is down by 57 pips (-0.44%) to 128.18
GBP/JPY is down by 48 pips (-0.33%) to 146.40
AUD/JPY is down by 34 pips (-0.42%) to 82.87
CAD/JPY is down by 48 pips (-0.56%) to 85.26
The Greenback was hit by a triple roundhouse kick of a not-so-hawkish FOMC meeting minutes, North Korea possibly canceling the June meeting, and the U.S. stirring the global trade pot further with an investigation into car imports.
USD/JPY is down by 62 pips (-0.56%) to 109.46
USD/CHF is down by 23 pips (-0.23%) to .9933
EUR/USD is up by 14 pips (+0.12%) to 1.1710
GBP/USD is up by 30 pips (+0.22%) to 1.3374
Watch Out For:
- 6:00 am GMT Germany’s final GDP expected to remain at 0.3%
- 6:00 am GMT: Germany’s GfK consumer climate to maintain 10.8 reading?
- 8:00 am GMT: ECB’s financial stability review
- 8:00 am GMT: BOE Governor Carney to give a speech in London
- 8:15 am GMT: FOMC voting member Dudley to give a speech in London
- 8:30 am GMT: U.K.’s retail sales (0.8% expected, -1.2% previous)