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Just when it seemed that all is well in U.S.-China trade relations, Trump revived market jitters when he reminded about the possibility of more tariffs after their 90-day truce.

  • Canadian quarterly labor productivity up 0.3% vs. 0.4% forecast
  • New Zealand GDT auction yielded 2.2% rebound in prices, -3.5% previous
  • U.S. IBD/TIPP Economic Optimism index down from 56.4 to 52.6
  • Trump: “I am a Tariff Man”
  • White House adviser Kudlow: Possible that Trump and Xi could meet again
  • Kudlow: Trade talks moving in right direction but may not get done
  • Australia’s AIG services index up from 51.1 to 55.1

Major Events/Reports:

Trade jitters return

Doubts that the U.S. and China could come up with an actual trade deal before the 90-day truce period is up were already in play in the earlier sessions. However, market anxiety kicked into high gear as Trump tweeted:

In the WSJ CEO council conference, White House economic adviser Larry Kudlow also admitted that while trade talks are moving in the right direction, there is still a possibility that a deal might not get done.

In the same conference, the POTUS’ national security adviser John Bolton also stressed the need for legislation to ban imports of products and services that may be involved in U.S. intellectual property theft. Kudlow also acknowledged that technology issues are crucial in trade talks with China.

Fresh Brexit setbacks

A series of unfortunate events seems to be the theme for Brexit developments as U.K. PM May’s government was found in contempt of parliament for failing to provide full legal advice on the exit terms.

In a 311 to 293 vote in favor of finding ministers in contempt and ordering the publication of legal advice pronto, No. 10 might be forced to give parliament a chance to adjust the deal. Also, this outcome could be a preview of how the “meaningful vote” on December 11 might turn out.

Risk-off flows accelerate

Wall Street traders weren’t in a very positive mood during the session as equities saw plenty of red on the return of trade jitters. Indices were down more than 3% for the day:

  • Dow 30 index closed 799.36 points down to 25,027.07 (-3.10%)
  • Nasdaq is down 283.09 points to 7,158.43 (-3.80%)
  • S&P 500 index is down 90.31 points to 2,700.06 (-3.24%)

Gold took advantage of safe-haven demand as the precious metal traded near its 5-month high while the dollar stumbled. Talk of the yield curve inversion also spooked market watchers as foreshadowing a U.S. recession.

It didn’t help that Fed official Williams floated the possibility of voting for four more interest rate hikes next year. After all, the idea of higher borrowing costs could make businesses and consumers more tightfisted with spending and investments.

Major Market Mover(s):


The pound returned its earlier gain as PM May encountered fresh setbacks on losing the contempt vote on giving Brexit legal advice. This could give the parliament a say in tweaking the transition deal if it winds up being rejected in the upcoming “meaningful vote.”

GBP/USD fell from 1.2817 to a low of 1.2658; GBP/JPY sank from 144.52 to 142.84; EUR/GBP popped up to a high of .8945; GBP/NZD tumbled from 1.8408 to a low of 1.8289, and GBP/CAD is down to 1.6835.


The lower-yielding yen was the king of pips as it cashed in on trade-related risk-off action and fears of a U.S. recession.

USD/JPY pulled up to 113.02 earlier in the session then fell back to a low of 112.57; EUR/JPY tumbled to a low of 127.72; AUD/JPY is down from 83.33 to 82.57 to fill its weekend gap, and CAD/JPY fell back to 85.07.

Watch Out For:

  • 12:00 am GMT: New Zealand’s ANZ commodity prices (-2.4% previous)
  • 12:30 am GMT: Australia’s Q3 GDP (0.6% expansion eyed, 0.9% previous)
  • 1:45 am GMT: Chinese Caixin services PMI (dip from 50.8 to 50.7 expected)