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Medium-tier reports from the U.S. turned out mostly weaker than expected, pushing the Greenback lower, along with Trump’s decision to call off the sit-down with North Korea’s leader.

The Loonie continued to slide on falling oil prices due to expectations of easing OPEC output curbs and more NAFTA jitters.

  • U.S. initial jobless claims up from 223K to 234K vs. 220K forecast
  • U.S. house price index posted 0.1% uptick vs. 0.5% consensus
  • U.S. existing home sales slid from 5.60M to 5.46M vs. 5.56M estimate
  • Canadian PM Trudeau: Does not see link between auto tariffs and national security
  • U.S. President Trump canceled scheduled meeting with Kim Jong-Un
  • Trump: Maximum pressure campaign on North Korea will continue
  • FOMC official Bostic: Cancellation of meeting with North Korea brings more uncertainty

Major Events/Reports:

Trump calls off date with Kim Jong-Un

So much for that highly-anticipated meeting between U.S. President Trump and North Korean leader Kim Jong-Un! The Donald decided to call off their date, accusing the country of bad faith.

In his announcement, Trump said that North Korea’s “tremendous anger and open hostility” in recent public statements led to his decision to cancel, saying that “this missed opportunity is a truly sad moment in history.”

He went on to threaten military action on the North and to step up their maximum pressure campaign against their nuclear program. He also promised to push for more economic sanctions, even as the hermit nation earlier demolished an underground nuclear testing site as a positive gesture ahead of the summit.

Officials from North Korea have stated that they are still willing to talk to Trump anytime. Kim Kye-gwan, a vice foreign minister of North Korea, said that the cancellation was “unexpected and very regrettable” but that they are open to “sit down with the United States any time, in any format, to resolve the problems.”

In an interview, FOMC official Bostic remarked that this development is part of the trade-related downside risks that policymakers are worried about.

Auto tariffs weigh on NAFTA talks

Earlier on, U.S. President Trump also made an announcement on his plans to make use of a national security law to impose 25% tariffs on imported automobiles.

Analysts say that this was made to pressure Mexico into a deal. Not surprisingly, its other main trade partner Canada wasn’t too pleased about this move, with Prime Minister Trudeau calling this “flimsy logic.”

“I am, even more than I was with steel and aluminum, trying to figure out where a possible national security connection is. Taking that a step further into autos seems to me to be on even flimsier logical grounds.”

Japan, China, and the European Union also protested these plans, saying that it would be in violation of WTO rules.

Resurfacing trade war fears dampen risk-taking

With most headlines focusing on resurfacing trade-related tensions, it’s no surprise that higher-yielders took hits. U.S. equity indices all closed in the red:

  • Dow 30 index is down to 24,811.76 (-0.30%)
  • S&P 500 index is down to 2,727.76 (-0.20%)
  • Nasdaq is down to 7,424.43 (-0.02%)

Gold regained ground on safe-haven flows while Black Crack continued to head south on expectations that the OPEC might ease its output restrictions.

  • Gold is up to $1,350 per troy ounce (+0.89%)
  • WTI crude oil retreated to $70.70 per barrel

U.S. bond yields also turned lower, likely on weaker than expected medium-tier data and further uncertainty stemming from trade relations.

Major Market Mover(s):

USD

The scrilla was on weak footing as trade war jitters remained in play while economic data failed to provide any support.

EUR/USD edged up from 1.1720 to 1.1751, GBP/USD bounced off a low of 1.3364 to a high of 1.3403, USD/JPY slid to a low of 108.95 and USD/CHF is down to a low of .9894.

CAD

The Loonie was stuck at the bottom of the forex heap, weighed down by sliding crude oil and resurfacing NAFTA troubles.

USD/CAD ticked up from 1.2861 to 1.2921, CAD/JPY fell from 85.31 to 84.42, EUR/CAD bounced to the 1.5100 mark, AUD/CAD is up to .9760, and NZD/CAD advanced to .8935.

Watch Out For:

  • 11:30 pm GMT: Tokyo core CPI y/y (another 0.6% gain expected)