NY Open: Trump readies tariff barrage

President Trump is ready to pull the trigger on China tariffs as early as today, reports Bloomberg citing "three people familiar with the decision" (a somewhat sketchy attribution). There is a silver lining in that the tariffs will be only 10%, not the 25% that was threatened. 

Wall Street opened in the red. The Nasdaq is leading the three major indices lower with a decline of 0.58%, but that is because Apple dropped 1.48% as of 13:55 GMT; China has promised to retaliate against the US measures. The retaliation could be in the form of export controls to disrupt the American supply chain. Apple could be a major victim as the bulk of iPhone production is in China.

US 10-year Treasury yields hit a four-month high of 3.02% but retreated to 3.00% coinciding with USDJPY dropping from 112.10 to 111.95, making it unchanged since the New York open.

EURUSD rallied from the open and hasn’t looked back supported by a bit of risk-aversion demand stemming from the China/US trade news. The single currency is also recouping losses after Friday’s US Retail Sales Report.

GBPUSD climbed the most in New York trading rising from 1.3099 to 1.3156 despite a rash of negative articles about a “no-deal” Brexit. The GBPUSD short squeeze continues.

The Antipodean price action suggests today’s FX activity has more to do with negative US dollar sentiment than it does with China/US trade relations. Both currencies rallied, and they usually sink on negative China trade or growth sentiment. 

USDCAD edged lower, undermined by broad US dollar weakness and speculation of a “handshake” Nafta agreement later this week. The speculation seems dubious since the top negotiators aren’t even at the table and Canada appears unwilling to concede on the dairy issue.

The USDX has dropped to just above 38.2% Fibonacci retracement support of the April-August range. A break below suggests further losses to 91.95. A move above 94.60 negates the downward pressure.