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Commodity currencies took huge hits while the lower-yielding yen enjoyed most of the safe-haven flows as China announced higher tariffs on U.S. goods.

  • U.S. ISM manufacturing PMI down from 60.8 to 59.3 vs. 60.1 forecast
  • U.S. construction spending up 0.1% vs. 0.4% forecast
  • China increased tariffs by up to 25% on 128 U.S. imports

Major Events/Reports:

Trade war fears escalate

Just when market watchers thought that leaders from the U.S. and China could hash out their trade differences diplomatically, China’s finance ministry announced that it would increase tariffs on U.S. products.

These include a wide range of items such as wine and frozen pork while the U.S. eyes higher fees on imports of steel and aluminum from China. The announcement indicated:

“China’s suspension of its tariff concessions is a legitimate action adopted under WTO rules to safeguard China’s interests.”

This refers to the Chinese Ministry of Commerce’s decision to suspend obligations to the WTO to reduce tariffs on 120 U.S. goods, instead raising duties by around 15%.

The White House is expected to release its list of Chinese goods subject to increased tariffs within the week, so stay tuned!

Risk appetite slumps

In response to resurfacing trade war jitters, equities tumbled deep in the red, led mostly by the tech sector. What a way to start the quarter, huh?

  • Dow 30 index is down 668.90 points to 23,434.21 (-2.78%)
  • S&P 500 index is down 77.32 points to 2,563.80 (-2.94%)
  • Nasdaq is down 227.34 points to 6,837.25 (-3.20%)

Precious metals managed to enjoy their safe-haven luster while crude oil tumbled:

  • Gold is up to $1,347.60 per troy ounce (+1.53%)
  • Silver is up to $16.645 per troy ounce (+2.32%)
  • WTI crude oil is down to $63.16 per barrel (-2.74%)
  • Brent crude oil is down to $67.79 per barrel (-2.21%)

U.S. bond yields are also in the red:

  • 30-year yield is down 0.09% to 2.968%
  • 10-year yield is down 0.52% to 2.730%
  • 5-year yield is down 0.71% to 2.547%

Major Market Mover(s):


Since the dollar was bogged down by trade war jitters and downbeat data, the yen took the lion’s share of risk-off flows.

AUD/JPY is down 72 pips to 80.95 (-0.88%), NZD/JPY is down 63 pips to 76.27 (-0.79%), CAD/JPY fell 64 pips to 81.75 (-0.79%), and EUR/JPY is down 80 pips to 130.13 (-0.61%)


The Aussie and Kiwi were down in the dumps as trouble in China’s trade sector could spill over to weaken demand for commodity exports.

GBP/AUD is up to 1.8352 (+0.64%), GBP/NZD is up 116 pips to 1.9468 (+0.59%), EUR/AUD is up to 1.6072 (+0.25%), AUD/USD is down 25 pips to .7653 (-0.34%), and NZD/USD fell to .7213 (-0.37%)

Watch Out For:

  • 12:30 am GMT: Australia’s AIG manufacturing index (57.5 previous)
  • 2:30 am GMT: Australia ANZ job advertisements (-0.3% previous)
  • 5:30 am GMT: RBA interest rate statement (no change from 1.50% eyed)