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Market watchers remained hopeful that Trump could temper his tough talk on tariffs for the most part of the New York session. However, a plot twist emerged when top economic adviser Gary Cohn announced his resignation.

  • Canadian Ivey PMI improved from 55.2 to 59.6 vs. 56.3 forecast
  • U.S. factory orders slumped 1.4% vs. projected 0.4% dip
  • U.S. IBD/TIPP economic optimism index down from 56.7 to 55.6
  • New Zealand GDT auction yielded 0.6% drop in dairy prices
  • API reported 5.661M build in crude oil stockpiles vs. 2.7M forecast
  • Trump’s top economic adviser Cohn reportedly resigned on tariff disputes

Major Events/Reports:

Easing trade war jitters… at first

White House officials had been trying to soothe trade war concerns early in the session, possibly in an attempt to keep financial markets from sliding any further.

Treasury Secretary Mnuchin, in a speech before the House appropriations committee, assured that proposed higher tariffs on steel and aluminum imports won’t apply to Canada and Mexico. He added:

“We are not looking to get into trade wars, we are looking to make sure US companies can compete fairly around the world.”

House Speaker Paul Ryan also noted that broad tariffs are a mistake, calling for a “more surgical and more targeted” approach instead. He admitted that the Donald’s plans could leave the U.S. open for retaliation, adding that members of the GOP are already telling the President to focus only on trade abusers.

Trump repeated in a press conference that, if they are able to strike a NAFTA deal with Canada and Mexico, then there will be no tariffs for them. However, he said that other countries don’t have the same concessions as these two and even reiterated plans to impose higher tariffs on European automobiles.

Soon after, top economic adviser Gary Cohn announced his resignation, likely because he couldn’t sway the Donald’s opinion on tariffs.

Recall that Cohn has been instrumental in convincing the White House not to label China as a currency manipulator and to renegotiate NAFTA instead of simply ending it. In short, he was one of the anti-protectionist dudes in the House!

A bit of risk-taking

Luckily for U.S. equities, the closing bell already tolled before the Cohn drama hit the newswires, which means that indices managed to escape with some gains.

  • Dow 30 index closed 9.36 higher to 24,884.12 (+0.04%)
  • S&P 500 index is up 7.18 points to 2,728.12 (+0.26%)
  • Nasdaq is up 41.30 points to 7,372.01 (+0.56%)

Futures, however, took a turn for the worse after Cohn made his announcement:

  • S&P 500 futures are down 32.50 points (-1.19%)
  • Nasdaq futures are down 86.00 points (-1.24%)
  • Dow 30 futures are down 339.0 points (-1.36%)
  • Nikkei 225 futures are down 315 points (-1.47%)

Major Market Movers:


The Loonie was once again the worst-hit by a combo of NAFTA jitters, trade war concerns, and a dip in crude oil after the release of API figures. Not even the upbeat Ivey PMI was enough to keep the oil-related currency afloat!

USD/CAD hit a low of 1.2862 but spiked up to 1.2960 afterwards, CAD/JPY is down to a low of 81.40, EUR/CAD is up to the 1.6050 area, and GBP/CAD is trying to break past 1.8000.


The yen took advantage of dollar weakness as trade war fears resurfaced towards the end of the session.

USD/JPY fell from 105.95 to a low of 105.55, EUR/JPY slipped from 132.02 to a low of 130.92, GBP/JPY is down to the 147.00 handle, AUD/JPY tumbled to a low of 82.02, and NZD/JPY slumped to 76.80.



Watch Out For:

  • 12:30 am GMT: Australian GDP q/q (0.5% expected, 0.7% previous)
  • 5:00 am GMT: Japanese leading indicators (106.5% expected, 107.4% previous)