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Tensions are heating up between the U.S. and China as the latter released another batch of higher tariffs on U.S. products like soybeans, frozen beef, cotton and other key agricultural commodities.

Even so, U.S. equities and commodity currencies were able to get back on their feet after a shaky start.

  • U.S. ADP non-farm employment change down from 246K to 241K vs. 208K forecast
  • U.S. ISM non-manufacturing PMI down from 59.5 to 58.5 vs. 59.0 forecast
  • U.S. EIA crude oil inventories down by 4.6M barrels vs. projected 1.4M gain
  • Fed official Bullard: Current interest rate level close to neutral
  • Bullard: Inflation still low but to move higher this 2018
  • Bullard: Low productivity weighs on growth, weak relationship between wages and inflation

Major Events/Reports:

Markets shrug off latest China tariffs

After a brutal performance during the previous trading session, riskier assets started to get back on their feet as the New York session went on as upbeat U.S. fundamentals may have improved the mood a bit.

  • Dow 30 index is up 52.29 points to 24,085.65 (+0.22%)
  • S&P 500 index is up 8.65 points to 2,624.32 (+0.38%)
  • Nasdaq is up 35.91 points to 6,976.99 (+0.50%)

The ADP non-farm employment change report dipped to 241K for March from an upgraded 246K figure in February, outpacing the consensus of a 208K gain and signaling a potentially positive NFP result. Components of the report revealed broad-based gains, save for the education sector that shed 1K positions.

The ISM non-manufacturing PMI fell from 59.5 to 58.8, lower than the projected 59.0 figure, indicating a slower pace of industry growth. Underlying data showed a pickup in the employment component from 55.5 to 56.6, though.

Bond yields are also in the green:

  • U.S. 10-year yield is up to 2.790% (+0.25%)
  • U.S. 5-year yield is up to 2.505% (+0.15%)
  • U.S. 30-year yield is up to 3.031% (+0.46%)

Cautious remarks from Fed official Bullard

In an interview, Fed official Bullard took the opportunity to share not-so-upbeat views on the U.S. economy. For one, he warned that the ongoing trade spat between Uncle Sam and China poses a lot of risks.

He also said that GDP growth is uncertain for the first quarter of the year, adding that it might not be necessary to hike rates even further. Take note, however, that Bullard is a non-voting member of the committee but his views could still impact those of his peers.

Bullard also noted that inflation remains low but is expected to move higher this year, although he pointed out that the relationship between wages and inflation is not strong.

On a less downbeat note, he cited that trade tensions could result in better arrangements in the future and he could adjust his outlook depending on this.

FOMC member Mester also had a speech but didn’t dwell too much on fundamentals or monetary policy.

Major Market Mover(s):


This comdoll tandem managed to stay ahead of the pack as traders appeared to move on from trade war jitters.

NZD/CHF is up 64 pips to .7018 (+0.91%), NZD/JPY advanced to 77.98 (+0.84%), EUR/NZD is down 103 pips to 1.6805 (-0.60%), and GBP/NZD is down to 1.9261 (-0.56%)

AUD/CHF is up to .7403 (+0.45%), AUD/JPY rose 32 pips to 82.24 (+0.39%), EUR/AUD slipped 34 pips to 1.5932 (-0.21%), and GBP/AUD is down to 1.8262 (-0.15%)


In contrast, these lower-yielders were at the bottom of the forex heap as traders flocked to riskier assets.

CAD/JPY is up 22 pips to 83.46 (+0.24%), GBP/JPY advanced to 150.23 (+0.25%), CAD/CHF is up to .7510 (+0.29%), USD/CHF is up to .9603 (+0.16%), and USD/JPY is steady around 106.70 (+0.09%)

Watch Out For:

  • Tentative: Australia AIG services index (54.0 previous)
  • Chinese banks closed for the holiday
  • 2:00 am GMT: New Zealand ANX commodity prices (2.8% previous)
  • 2:30 am GMT: Australia’s trade balance (smaller surplus of 0.68B AUD eyed)